coffee by 3/4 of a cup. Today is the day our government votes on the debt ceiling. I have not had much time to research the way I would ultimately like to, however, here is my prediction based on some of my own research.
- What is the debt ceiling for? It is to limit lawmakers spending. We can see it works, huh. Obviously not. I am personally wondering what the use is of being able to raise your own credit limit?
- We have to raise the debt ceiling because there are two other options: Default on financial obligations as a country or raise taxes by billions (several hundred billions) of dollars. Both are really bad. Here is why. First, raising taxes by hundreds of billions of dollars will put markets around the world in the toilet for a multitude of reasons, not to mention the fact that it will spiral an already crippled U.S. economy into a depression, if we are not already there. People already have stopped spending, and are being more cautious. Imagine if your taxes hit 60% not unlike Germany?
- Defaulting on financial obligations, hmmm… I wonder what would happen if everyone stopped lending us money after defaulting on loans. What would that do to the economy? What would that do for the government? What would that do to the markets? I have personally had credit card issues in the past and know what it is like to “try to catch up.” Imagine our country having to double up on payments on obligations to China to catch up? Seriously? Again, detrimental to investors and our economy. This is again high risk, hurting the US economy dramatically.
- What if we just cut spending? Not sure that is going to happen either. Cutting spending puts more people out of jobs, and budgets have to be re-evaluated. If not done right, from everything I have read, the government may not have the funds to make it to the end of our fiscal year. At least that is the argument. While I don’t agree with this assessment, I am not a financial expert. In fact, I may be a little confused.
Now, reaching the debt ceiling today, or let me rephrase, reaching our government’s credit limit today, will not technically shut the government down. Although, maybe it should. Maybe it should close and lock the doors and spiral us into a financial oblivion. This isn’t some romantic “get the existing incumbents out dream.” I know that sounds harsh, but I am not confident that they are going to come up with a good or right solution. This may need to be done to actually take action on balancing our national budget. Congress’s borrowing power needs to be limited going forward. To that end, in the next four hours, if our government decides not to raise the debt ceiling, and cut costs, government may be forced to partially shut down.
Unfortunately, I think there is no right answer for any of us. There are repercussions for the common person like you and I no matter what decisions they make. I am just not sure I trust them to make the right decision…
By the time you read this, a vote will have been cast, and we will be speculating about the fate of our nation, financial well being for family, friends, and future. I hope it is positive for all of us.
This video added at the end of the day, post vote