First there is the whole 'default' and doom-and-gloom scenario. You know, where President Barack Obama and the Democrats are saying that failure to raise the debt limit will mean the United States will default and send the world into chaos, even though that wasn't the case when George W. Bush was president.
In 2006, every single Democrat voted no to raising the debt ceiling. That also means that Republicans who were in office then voted in favor of it.
Today, the Dems are saying the world will end without an increase and the Republicans are saying 'only if we cut spending, too.' At least the Republicans seemed to have learned from the past several elections and the Tea Party movement consisting of members of all political parties demanding a fiscally conservative approach for the federal government.
But the whole 'default' discussion isn't really relevant. When you reach your limit on your credit cards, you don't declare bankruptcy - you just have to stop using them for purchases. As long as you can make the required payments, your card isn't cancelled and you don't 'default.'
This is the same as the U.S. government. While they may not be able to borrow any more money, they don't have to default on the loans - at least, not as long as they make their payments. As Cato explains:
The Treasury Department estimates that the federal government will collect a bit more than $203 billion in taxes during August — roughly $36 billion just in the first three days. But, during August, the federal government is expected to spend $307 billion. That is why we have a problem.
If the government is not able to borrow more money after Aug. 2, spending will have to be reduced to the amount of revenue that the government has. That would require roughly a 44 percent cut in federal spending.
This will almost certainly hurt. But it's not the same as default. During August, interest payments on the federal debt will total roughly $29 billion, meaning that there will be sufficient revenue to meet our obligations to creditors. If the Obama administration is truly worried that we might not do so, they could always support legislation by Sen. Pat Toomey (R-Penn.) that would require the Treasury Department to pay our creditors first.
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In fact, the revenue we will collect in August would more than cover Social Security payments, Medicare and military salaries, in addition to interest payments on the debt.
It's a matter of priorities, as this article from the Washington Post explains, but setting priorities is, apparently, a 'heinous' choice for the President:
“You do not have to default and you don’t have to shut down the government if you choose not to,” said Peter Morici, an economist at the University of Maryland. If Congress raises the debt ceiling without a long-term plan for reducing the federal deficit, he added, “they’ll never solve the problem, and we’ll end up like Greece.”
Obama’s advisers have said that prioritizing some payments over others is impractical and would be chaotic. Money comes in and flows out at an inconsistent rate.
“You would have to make heinous choices about which bills you would pay,” White House press secretary Jay Carney said Wednesday.
Just what does he think the rest of the world - and the citizens he's supposed to represent - are doing?!?
But that's not all - as Mark Steyn explains:
In the real world, negotiations on an increase in one’s debt limit are conducted between the borrower and the lender. Only in Washington is a debt increase negotiated between two groups of borrowers.
And he's right. You and I (and our descendants for probably more than a generation) are the ones expected to the foot the bill for this debt, as Steyn, with his irreverent sense of humor and irony, demonstrates:
On the one side are Obama and the Democrats, who in a negotiation supposedly intended to reduce American indebtedness are (surprise!) proposing massive increasing in spending (an extra $33 billion for Pell Grants, for example). The Democrat position is: You guys always complain that we spend spend spend like there’s (what’s the phrase again?) no tomorrow, so be grateful that we’re now proposing to spend spend spend spend like there’s no this evening.
On the other side are the Republicans, who are the closest anybody gets to representing, albeit somewhat tentatively and less than fullthroatedly, the actual borrowers — that’s to say, you and your children and grandchildren. But in essence the spenders are negotiating among themselves how much debt they’re going to burden you with. It’s like you and your missus announcing you’ve set your new credit limit at $1.3 million, and then telling the bank to send demands for repayment to Mr. and Mrs. Smith’s kindergartner next door.
Nothing good is going to come from these ludicrously protracted negotiations over laughably meaningless accounting sleights-of-hand scheduled to kick in circa 2020. All the charade does is confirm to prudent analysts around the world that the depraved ruling class of the United States cannot self-correct, and, indeed, has no desire to.
Think about the spending. We've got elitist politicians in DC bickering over the debt limit and saying they can't guarantee that granny is going to get her Social Security check in August, yet they're handing out $1 million for 'solar art.'
Seriously. The regional transit authority, along with the Arts Commission of Greater Toledo, is going to jointly design a solar panel to be used to help offset the cost of lighting the administration building. TARTA hasn't calculated exactly how much per year the solar panels are going to save, but they're going ahead with the project anyway. Isn't that grand?
For reference, the solar panels on the I-280 bridge (also a 'gift' from our 'esteemed' representative) cost $1.5 million and were 'projected' to save $9,721 per year in energy costs. When you do the math, you'll find that project will take a little more than 154 years to break even. And those solar panels only have a lifespan of about 20 years.
No wonder TARTA hasn't done the calculations!
Really now, if we're truly in need and at risk of default, shouldn't the federal government put a hold on such 'unnecessary' expenditures? Wouldn't even our representative, Marcy Kaptur, agree that NOT spending money to put a solar array on a TARTA building so they can, hopefully, save money is the wiser course of action - at least until the debt limit is addressed?
And how many other expenditures of this nature have been made over the past several months? A simple Google search for "representative announces grant" produced 9.8 million hits in .2 seconds. That's a lot of spending!
Washington elitists don't live in the real world - at least, the ones insisting on raising the debt limit don't. Even Republicans, who are holding the line and insisting on spending cuts and no tax increases, are only talking about cuts 'over the next 10 years.'
We all know that those cuts aren't guaranteed and that future congresses can decide to eliminate then and spend away. We've got history to show us this potential is actually the norm. Besides, if they can't stop spending on superfluous stuff today, what makes us think they've got the intestinal fortitude to stop in the future?
Raising the debt ceiling to solve our financial predicament is the equivalent of raising the blood-alcohol level to solve drunk driving. It doesn't work and we all know it - how can our politicians not know this, too?
Logic and common sense are completely lacking in the discussions, but fear-mongering, political posturing and rhetoric are rampant. We'd never survive if we ran our personal finances this way - and fortunately for our country, the majority of Americans not only recognizes this, but is speaking out and holding the elitists accountable.
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