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Debt Ceiling And Budgets - Let The Politicians Act Responsibly (For Once)

Enough with political rhetoric.Let's do something fiscally responsible,&in the best interests of the American public.Let's think outside-the-box.

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.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Joyce Schneider July 26, 2011 at 12:56 AM
Yes, let an independent body of economic and financial experts with NO ties to gov't leaders and politicians examine the current budget and spending, make fair assesments, find ways to reduce the ever increasing # of people paying little or no income tax, eliminate congressional "perks" etc etc , and combine that solid ideas of how to stimulate job creation, and stop the agenda pushing, polarizing rhetoric being spewed like toxic nuclear waste! Grow up, politicians or else take your toys and get out of the sandbox called Congress!
Bob July 26, 2011 at 02:24 PM
No other major developed country has a debt limit. When Congress votes for more spending than receipts, it should be automatically voting to approve the additional debt needed. The place to discuss spending vs. taxes is during the budget debate and approval of all spending bills. The debt limit just encourages our dysfunctional government to be even more dysfunctional. We already had a commission study spending and revenue. It was called the National Commission of Fiscal Responsibility and Reform, also known as the Simpson Bowles Commission. They issued a 65 page report in December 2010. Both sides immediately rejected it because it attacked all sacred cows and gave a balanced way out of our problem. While there are provisions in it that I don't like, enacting all of it would be better than the predicament we are in now.
Joseph Mirzoeff July 26, 2011 at 08:01 PM
http://www.thedailybell.com/2727/Ron-Paul-The-Pesky-Neighbor-and-the-Debt-Ceiling It is absolutely sickening that governments that collectively charge about 40% of all normla people's income for government services also need to borrow, because it is not enough.
Richard Brody July 28, 2011 at 02:53 PM
Bob, you are absolutely correct that there have been previous commissions, and that the politicos have defeated the recommendations. What I am recommending is to think outside the box, where this commission of economics and financial people (not politicians) from both sides of the political spectrum, devise a bipartisan intelligent and comprehensive plan, for the long haul. However, for it to have any "teeth" and NOT just be another meaningless political exercise, is that it would need to take 60% of the Congress (BOTH the House and the Senate) to overturn the recommendations-- Otherwise, it becomes policy. There will be provisions that everyone opposes! However, we MUST also take a close look at how the Social Security and Medicare funds are comingled with General Funds, although separate taxes are paid for these. Then SS + Medicare can be evaluated for effectiveness and efficiency, BUT cuts overall should not be put on those programs shoulders.

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