Raise the Roof (Or the Debt Ceiling)

After finally coming to terms with a budget for 2011 almost immediately attention turned to what to do with the debt ceiling. It seems that the debt ceiling is something that should be raised without little debate. The Republicans are pledging that they will not raise the debt limit without significant changes to current government spending levels. Democrats warn the Republicans to not play on this issue like they did the budget, dragging it out to the eleventh hour. Sounds like typical political banter, but obviously we need to pay our bills, right? Seems fairly straightforward that the debt ceiling will need to be raised and soon. If it is not raised before July we (meaning the whole world) will face catastrophic consequences. Despite these warnings according to a NBC News/Wall Street Journal poll 62% of Americans say DO NOT raise the debt ceiling. Now, let’see…Democrats and Republicans alike believe that we need to raise the debt ceiling, economists say it needs to be raised, what do 62% of the American people not know about the debt ceiling?  

What’s the Point?

Tom Coburn, US Senator from Oklahoma made an interesting point on Sunday’s Meet the Press. He states, “A debt limit doesn’t really mean anything because we’ve always extended it.” If we always extend the limit why do we even have one? The debt ceiling was actually established in 1917. This was established because prior to 1917 Congress had to gain approval every time they wanted to borrow money. Once in World War I began it became crucial that Congress had the ability to approve borrowing in a quicker manner. Basically the federal government was given approval to borrow as long as it remained under the limit of the debt ceiling. Currently the debt limit is $14.3 Trillion. This point will be reached on May 16^th with the breaking point happening on July 8^th. The debt ceiling has been raised relatively drama free for nearly 100 times, most recently in February 2010. So pretty much a debt ceiling is a reminder to the American people that the government is approaching the point where the feds have to ask before they can borrow more, but pretty much they will make it so they raise that amount anyway.

It has to be Done

Both sides agree that the debt ceiling must be raised. It is the terms that they do not agree on. We hear it over and over again that spending is at an all time 50 year high. Entitlements need to be cut, we need to raise taxes on people making over $250,000 per year, we need to eliminate tax loopholes for the very rich, we need to cut defense spending, or we need to get rid of programs. The constant debate and political posturing never seems to end. The facts are whether either side gets what they want the debt ceiling will have to be raised, so why don’t the politicians spare us the rhetoric, raise the ceiling, and then continue on with their battles. What it boils down to is that the Democrats seem to think that $2.2 Trillion is needed to get us through the year and Republicans want $1.9 Trillion to get us through this year and half of 2012. Seems close enough, or at least close enough to find a compromise, without dragging other issues into it. The hard facts are that if the debt ceiling is not raised then the US will not be paying their debts to other countries. If they are not paying their debts it could cause a global financial crisis. In short, the US has to pay their bills or everyone will pay in the end. Regardless if the debt ceiling is raised or not the debt will still be there.  

Why are we Here?

If 62% of people do not agree with raising the debt ceiling even though it virtually has to be done many of them would probably like to know why in the world we are even in this situation. Here’s the breakdown. Past 11 years, 2 wars (Iraq and Afghanistan) numerous tax cuts while at war ($4.36 Trillion), and one big ($3.9 Trillion) economic stimulus. Arguably all things that at the time the American people did not think that we could live without. As David Gregory stated on Meet the Press, “The American people want more government than they want to pay for.” Now isn’t the time for the debate on spending, rather it is a time for the parties to get it together and do what needs to be done.

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Special thanks to:

http://www.washingtonpost.com/business/economy/whats-the-debt-ceiling-and-why-is-everyone-in-washington-talking-about-it/2011/04/15/AFSS4R1D_story.html

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