This and That

The Debt Ceiling -Part 2

Posted on: July 27, 2011

The first blog I did on the debt ceiling was mainly just my ranting about our politicians inability to find a compromise and make a deal. This second part will focus on the current facts of the debate, my thoughts, and the plan I would impose if I had a say. Be aware I’m not just a pretty face. I have an economics degree so I am qualified to make these statements.

Here are the facts:

-Our current debt ceiling is at $14.294 trillion

-Our country hit this debt ceiling on May 16th,

-Aug 2 is the last day to make a deal and get it passed through Congress so America doesn’t default on our loans

-The debt ceiling needs to be raised around $2 trillion through 2012

-Defaulting on our loans would result in the following: rising interest rates, a decline in the dollar, increased instablility in financial markets, and a loss of confidence in America’s credit and promises.

-Republicans believe the debt ceiling is too high already and raising it more would only increase our problems. Republicans want to cut spending in Social Security, Medicare, and other government programs. They do not want to raise taxes on any Americans to earn extra money to offset our spending.

– Democrats believe the debt ceiling needs to be raised in order to avoid all the consequences of defaulting -it’s a must do. They do not believe in cutting money from Social Security, Medicare, etc. They want to raise taxes on the wealthiest of Americans to increase our country’s income.

Here’s the current situation:

Last week, negotiations seemed to be making progress. Our politicians were talking, there was some give and take, and there was hope that a deal was going to be made. Yes it wasn’t a perfect deal, but a deal none the less. But then the Democrats wanted more taxes and then the Republicans walked away from the table….seriously?!?

This week, Obama addressed the American people calling for our help to push through the Democratic plan.

Treasury Secretary Tim Geithner’s wisely commented “you don’t want politics messing around with America’s faith and credit.” Geithner acknowledged the debate issue saying, “They have taken this a little too far, frankly.”

“We are now getting to a point where markets around the world will question whether the political system in Washington can come together and compromise for the greater good of the country,” White House Chief of Staff Bill Daley said on NBC’s Meet the Press.

Here’s my thoughts:

There is a two step plan on the table (well… that’s being revised) that I generally think is a good idea but I would add one additional step. The two step plan calls to raise the debt ceiling in stages but have it be tied to spending cuts through 2012 and the over the next 10 years. I would raise the debt ceiling in stages, cut spending, AND increase our country’s income with some taxes. That would be my plan…a three step plan.

It is amazing to me that someone would think that our spending isn’t out of control. We can’t keep spending money we don’t have! That is not how a government prospers, that’s not how a company prospers, and that is not how a household prospers. I manage the budget for my family. I know how much money we have coming in and how much is going out. If I spent more money than I have, I would have the bank and creditors knocking down my door demanding their money. Running from creditors, accumulating more debt is not the way to live, and it’s not the way for our government to run our country.

Spending needs to be cut, but I don’t believe that all or even the majority of spending cuts should come from Social Security and Medicare. So many Americans rely on these services and they would be greatly hurt in losing them. I think spending should be cut evenly throughout all our government programs. Then hopefully there won’t be too much pain on the Americans who rely on them.

Now on to step three. It’s not just about cutting spending. There does need to be an increase of income and some of that can come from raising taxes. I don’t think it is an outlandish idea to tax the wealthiest of Americans. Being the richest I think they could afford it.

So as you can see my thoughts are a little Republican and a little Democratic. You know, like a compromise. A word that doesn’t seem to resonate with our politicians.

What do you think? What would your debt ceiling plan look like?

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5 Responses to "The Debt Ceiling -Part 2"

I liked how in the President’s speech, when talking about raising taxes on the wealthiest Americans, he included himself saying people like me who can afford it and never asked for the tax cuts in the first place.

I totally agree. The wealthiest and big business can afford a few extra dollars in extras. This has to be a give and take…except nobody is giving just taking.

Great article. I also believe that spending is out of control & has to be reduced but congress authorized all this spending – no party can spend money that congress does not authorized. So this debt is not a surprise – it is accounting 101. Now is not the time to play Chicken. Raise the debt ceiling (the ceiling all of congress created) and then make the cuts in a calmer climate. You are so correct that to cut Social Security, Medicare, Unemployment would be so wrong (hurting the people who are the most in need – how does that make sense). Keep writing.

Cut medicare, cut social security, those words certainly insight fear don’t they. The reality is our federal government takes in over 200 billion dollars A DAY. If they can’t get it done on that then we have some serious spending cuts that need to happen.
Raise the Debt Ceiliing, again, we are all afraid of what, i don’t know. Raising the debt ceiling is like you or I getting another credit card and running that up. Not a good idea.
Cut spending and quite whining,

Thanks Kenna! I love talking about this and hearing everyone’s view. IT is a great point that spending is out of control. Great example about the credit card .
And thanks for reading my blog! I really appreciate and hope you will keep reading! 🙂

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