Enough is enough with the politics as usual that goes on in Washington. With only about a week remaining until the U.S. Government officially runs out of funds to pay its bills, our politicians continue on their course of being the most polarizing in my memory. While the debt ceiling has been risen numerous times in the past (and in most cases, without much hooplah), this debt ceiling increase has escalated into a political ideology battle, with the American public either being the hostages or the potential victims. It is important to see through the rhetoric on both sides of the political spectrum, and it is time for the politicians to, for once, act like statesmen instead of politicians.
Let us all remember that for most of American history, the United States has run at a deficit. Think about it – that is why the government issues government securities such as T-Bills and Bonds, etc. It is also important for us to realize that when President Bill Clinton left office, he turned over a surplus budget. That surplus quickly turned significantly into a deficit after 2001 (9/11) and our costly involvement in wars in Iraq and Afghanistan. When President Barak Obama took office, he inherited a downward trending economy, with major financial issues, a suffering stock market, ever-increasing unemployment, etc. In my opinion (and many others), President Obama further exacerbated the situation by emphasizing health care instead of employment and the economy, and the worldwide energy price crisis has made a bad situation even worse.
This is not the time to place blame! It is also not the time to play political games! It is time for politicians to act responsibly for once!
What happens if the debt ceiling is not raised? The United States would have to default on some of its debts, and both rating services have indicated they would lower the credit rating of US securities. What would that do? It would make it more expensive for the US government to borrow money, and thus that effect would trickle down and adversely effect state and local borrowing, as well as corporate borrowing. Banks would probably have to raise the interest they paid, and thus because of their increased costs, would raise fees (such as credit cards, etc.). The inevitable impact of this would also impact retail establishments, which would pay more for products, see their customers undergoing "tighter" funding, and thus there would be considerable threat to these businesses bottom line. What would this do? Almost certainly, impose greater stress on an already hurting economy, and would negatively impact the employment picture.
We hear politicians discuss the impact on Social Security and Medicare. In all fairness, these programs should not even be discussed, because they are funded with separate payroll taxes that both the employer and the employee are paying into, and in the case of self-employed people, they are paying a considerable tax themselves. In the 2000 Presidential election, when President Clinton had left a surplus budget, candidate Al Gore continuously discussed a "Lockbox" for these funds to protect them. Surveys indicate that many Americans do not even realize that these funds are commingled (I personally believe improperly) with general funds, and these separate taxes are being spent to pay down a deficit.
It is certainly not the first time the debt ceiling has been raised. It has been done numerous times, almost always without much political discussion. Most economists believe that the impact of failing to raise the debt ceiling (and the subsequent defaults) would cause significant issues. Should the deficit be reduced, and ideally eliminated? Absolutely! However, with the climate in Washington, where there is incredible polarization and intransigence on both sides, there appears to be more demagogery and posturing that significant work being done.
We should demand an end to the rhetoric. The solution should be the creation of a bipartisan commission of economists and financial experts that examine the budget and government spending in detail (Do any of us trust that the politicians will do the right thing, instead of the politically expedient?). This commission should be given a finite period (three-six months) to thoroughly examine all relevant financial issues, which should include using zero- based budgeting, and creating a fairer tax code (without the unfair preferences). This commission should be given sweeping authority, and only if 60 percent of the elected officials in both the House and the Senate vote against it (and the entire package as a whole) would it not become law. Since the politicians refuse to become statesmen, let's force them to do something reponsible and responsive for the American public.
The bottom line is that both sides of this issue should be ashamed. However, there are incredibly dire ramifications that are possible if this is not handled responsibly.