The fact that the United States government agreed to up its debt ceiling limit (with a compromise to delay making any real changes until this fall) is a perfect symbol of the entrenched and intractable spending/revenue problem at Washington.
The deal reached to move beyond the debt ceiling fight last week included appointment of a committee of 12 congressional figures to cipher how to chop $1.5 trillion in federal spending by November.
This impressed no one politically, maybe because half of the committee’s members will be Republicans, the other half Democrats, thus trading current gridlock for later stagnation.
This is one of the key faults of the whole debt-ceiling type of financial debate. You make a highly public symbol of financial recklessness, allowing politicians to ramble on about it, never talking turkey about the need to trim entitlement programs such as Social Security or Medicare or the ongoing height of defense spending – reductions of which might actually lead to lower debt but also to some angry constituents.
The immediate problem with this political game of financial chicken is that the turmoil in Washington has bled over into our economy, judged by the latest meltdown on Wall Street.
Fallout from the Congressional stalemate brought a downgrade of our nation’s credit rating and subsequent heavy losses in the stock market. Analysts agree the lowered opinion of our nation’s ability to pay back debt stems more from political stonewalling at Washington than from any real change in our country’s ability to pay back debts if necessary.
To put this in simpler terms: You might view the debt-ceiling as a diet goal for a junk-food devouring obese person. The ceiling limit was an arbitrary number, not required by any bank or the Constitution. (Denmark is the only other nation with a debt ceiling.) The ceiling was simply a goal of what our debt should not exceed, as a dieter might restrict his dessert intake.
If you exceed your daily caloric intake, it’s a bad sign, just like a government blowing past spending limits bodes poorly for future economic health. The problem here is that when we blew it, we made it more than a warning sign. Politicians spun a catastrophe.
The thing needed at Washington was to adjust course in a sensible fashion. Instead we got argument and bluster.
You can’t accept the Democrat’s approach of “Well, we blew it, let’s just raise our limits and ignore the fact that we over-eat with no intention of stopping.” But, neither can you buy into the Republican approach: “Immediate crash diet; don’t eat anything, not even the healthy stuff!”
What’s needed is less chest-beating over arbitrary figures and more work in Washington on the real deal: the yearly budget.
We wouldn’t have to worry about our debt ceiling if lawmakers worked yearly (and not in some newly appointed committee) to come somewhere close to balancing the federal budget. To do that, cuts are likely hard to find in amounts that matter and are wholly palatable to the country at large.
Senate Minority Leader Mitch McConnell has fired a few warning shots in this search for cuts, shots in the general direction of entitlement programs that account for so much of the federal budget. Tie entitlements to the present level of defense spending for commitments in Afghanistan and Iraq, and you are quickly at a loss to find that famous federal pork in quantities fit to trim $1 trillion from the budget.
As McConnell and others have said somewhere, “changes are necessary to preserve Medicare and Social Security.” But at this turn, our whole economy has borne the brunt for political fighting that actually steered the conversation away from tough choices ahead––namely: How do we make cuts without getting rid of any of the programs that many people still rely on?