January 14, 2011
The US Government Debt Ceiling
You might have a credit card or two like I do. Unless you're Bill Gates, Warren Buffet, one of Sam Walton's daughters or Sir Richard Branson, you undoubtedly have a credit limit on your card. The same is true for the US Government. It's called the Debt Ceiling.
Because of the out-of-control spending that's happened in the last ten years - but especially the past two years, the US debt ceiling has been ratcheted up as regularly as stock prices in a bull market.
It's got to stop. We must not raise our debt ceiling. We need to cut back SPENDING by 15 percent or more if at all possible. This will allow us to meet our obligations without BORROWING money. You can't ever spend your way out of debt. If you think it's possible, give me real clear examples in the comments below.
You're going to hear all types of pundits and politicians beating their scare drums saying something like, "Acccckkkkk! If we don't raise the debt ceiling, we'll default on our US Treasury Bond payments and our AAA rating will be reduced. Then we'll pay more interest on our future bonds because we'll have to offer a more-attractive interest rate."
Here's a novel idea. Let's cut way back on spending so we can meet current debt obligations. Oh, I can here the lamentations now. "Tim, give me examples of where to cut. How would you do it? Blah, blah, blah."
It's so easy. How do you do it at your home? Are you out of a job? Did you get a pay cut? Did your spouse get laid off? What did you do? Did you STOP all unnecessary spending? Probably.
Did you cut back on extravagant spending? I'm sure you did. Did you try to pay your debts first and then the things needed for bare survival? I'm willing to bet Yes is the answer to that.
We can do the same thing at the national level. You and I both know there is enormous waste in many pork-barrel projects. There's massive waste in all programs. You and I know that for some reason, pay and benefits to Federal employees has gotten way ahead of the private sector. We can bring that back in balance easily.
We can follow the lead of Governor Chris Christie in New Jersey. We can study, in great detail, the proposed financial plan of Congressman Paul Ryan. We can create a 30-member task force of wise businesswomen/men who have done great jobs of cutting waste out of companies.
This task force can offer up solid proposals to bring down expenditures that will allow us to operate within budget and not raise the debt ceiling.
The bottom line is that we just have to stop the drunken spending. How many people do you know who have ruined their lives by out-of-control credit card spending? Be honest.
You're witnessing the same thing happening on a grand scale with many state governments and our Federal government. Study history and there are many examples of governments that have failed because of wasteful spending. Let's make sure the USA stays off that scrap heap for many more generations.
Not raising the debt ceiling would mean that the Federal Government would have to live off the revenues generated in any given period.
I analyzed some data from October, 2010. That month the US ran a deficit of $140 billion. Revenues (including Social Security Tax) were $146 billion. Outlays or expenditures were $286 billion.
Major specific outlays or expenditures were:
Health & Human Services (Medicare & Medicaid) = $71 billion
Military = $65 billion
Social security = $64 billion
The total of these three outlays is $200 billion
So if we just use October as a typical month, we would not have enough revenue to fund these 3 items OR any of the other expenditures such as interest on national debt, military etc.
I think the ramifications of this would be worse than the 2008-9 crisis.
The link below will take you to the official report of where I have obtained my figures.
http://www.fms.treas.gov/mts/mts1010.pdf
John C on January 14, 2011 3:11 PMTim, We don't need wisemen to tell us where to cut. We know only by abolishing social security and medicare can we ever get our budget back into balance. Everything else goes for services which taxpayers need. God knows we need farm subsidies so we keep the price of food down and oil company tax breaks to keep the price of gas low.
Robert Thomas on January 18, 2011 6:23 PMOld people in this country are sucking up all the resources. They are going to die soon anyway, so why not just let it happen. We would end up with a manageable elderly population who can pay their own way and the rest of us could get back to enjoying the good life.
My daddy raised 5 kids on a shipping/billing clerks salery. We all had what we needed and sometime what we wanted.
Snert on January 19, 2011 11:39 AMUsually it was a hard row for him to hoe but we survived and were happy without any credit cards.
Debt ceiling? Don't spend money you don't have.