Archive for July 26th, 2011

The Debt Ceiling

I don’t typically post about political issues, but I can’t help but share my view about the debt ceiling.  Basically, I’m aggravated because both sides are arguing, yet both sides are right, and both fail to see the big picture. 

Would it be bad for the United States to default right now, further damaging an already fragile economy?  Yes. 

Would it be bad for the United States to keep raising the debt ceiling and keep incurring vast debts that we will have to pay in the future?  Yes. 

So what’s really going on here? 

Imagine a typical, middle-class family facing foreclosure.  One spouse is unemployed/underemployed, the family is struggling financially, and they’re running up credit card debts to try to stay afloat. 

Everyone knows, when you put it in these terms, that the family can’t keep using their credit cards forever.  Eventually, something will have to change.  If the family’s income doesn’t increase, then, at some point, the family’s creditors will insist that the debts be paid and, unable to do so, the family will be foreclosed, bankrupt, or both. 

Everyone realizes this, right?  Then why is the analysis any different for America?

Our country is in the same boat.  We can keep using our credit cards (running up the debt ceiling), but eventually, our creditors are going to push for payment and, unable to pay, we’re going to go bankrupt.  Alternatively, at best, future generations are going to pay out the wazoo for the debts we’re incurring now. 

As I see it, America has incurred enough debt in recent years.  If we’re going to raise the debt ceiling, fine, but do so as part of a plan to cut spending and pay that debt back.  Otherwise, America is no different than a family running up credit card bills with no realistic ability to pay them back.  In other words, it’s not fair to future generations to incur these debts simply because Americans don’t want to deal with its problems now.

Mark Stopa

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