The Debt Ceiling and Common Sense

I don’t know where to begin, I’m so upset at what I see going on in DC. I know , I know, join the club, but I’m beginning to believe that we are living in a Twilight Zone episode and there are no commercials. We’re broke, and both sides have come up with plans that don’t solve the problem. One shoves us over the cliff right away, the other one slows down our imminent doom. Don’t get me wrong, slowing down imminent doom isn’t a bad thing. But we need to actually solve the problem, not just delay Armageddon.

Our national debt is 14.3 Trillion dollars. That’s a 14 with TWELVE zeros after it. This number just also happens to be the approximate GDP of our country. That means our debt is close to 100% of our country’s entire output of goods and services. In simple terms this means that if we sold everything in this country that wasn’t nailed down, and a few things that are nailed down we wouldn’t have enough money to pay off the debt. That’s how enormous this debt truly has become. Here we are once again having an end of the world discussion in DC about raising the debt ceiling.

First of all, I’m no financial expert or anything of the sort. But I feel I’m a pretty smart guy and try to do my research so I can understand as much as I can about an issue. I’m one of those rare people these days, I actually paid attention in school, and want to make sure I can make a reasoned choice when elections roll around. That being said, the way I see this debt ceiling is akin to any of us running up credit card debt. If you keep getting larger limits on your credit card, yet continue to only make the minimum payments, what happens to your balance? It keeps going up and up. The same thing is happening on a grand scale with our government and the Debt Ceiling. We’re barely making the minimum monthly payment and raising our limit on the cards. It’s time our country looked into a debt consolidation service and get some financial counseling. We need help.

We’re told that if we don’t raise the debt limit, birds will fall out of the sky dead, women and children will go mad ,old people will be dragged out into the streets and shot to save money, and the Sun might actually cease to rise. That sounds pretty serious, but is it really that dire a situation? From what I’ve read, servicing on the debt, basically paying the minimum, is about 200 Billion Dollars per year. We take in a little over 2 Trillion Dollars a year in taxes and fees. Funny how a proposed budget of 3.5 Trillion Dollars confuses people about how the debt could be as high as it is…but I digress. So, we tak in a little over 2 Trillion , and as long as we make the minimum payment and DON”T UP THE LIMIT OR SPEND MORE MONEY THAN WE MAKE, things won’t get any worse…financewise.

The debt won’t go down, but it won’t go up either and that my friends, is a good thing. Meanwhile, we’re still taking in a little over 2 Trillion a year. Take away the minimum payment and we’re looking at basically an even 2 Trillion Dollars a year of income. The world won’t end, dead birds won’t fall from the sky, and the Sun will rise the next day, and the day after that, and so on.

What will change is that Congress will be forced to only spend what we take in, such a novel concept I’m sure none of them have thought of it. Will this mean pain for everyone in the beginning? You betcha, but little old ladies will still be able to go to the doctor, SS checks will still go out, and so on. The way these programs work will have to change of course. Perhaps some things the government does now will have to be subbed out to private contractors. This too, is a good thing. Private contractors negotiate a contract which sets the cost of the job. It’s up to the contractor to have bid it properly so as to make a profit and pay their employees. This price is 9 times out of 10, a LOT cheaper than the government would charge. Not only that, but private companies make their employees hustle, quality control is very important in private business, cost efficiency is obviously huge too. This all translates into savings of epic proportions to the federal government.

Obama and the Democrats want to just transfer the balance to a new credit card with an awesome introductory interest rate and keep the party going. The Republicans want to get a better job that pays more, not spend as much. They’re hoping that a growing economy and reduced spending will lower the percentage of the GDP that the debt takes up. The debt will still rise under Rep. Ryan’s plan, just not as fast. Neither plan fixes the underlying problem, that being, Overspending on a scale unheard of until now. We’re making Greece look like rank amateurs when it comes to our addiction to debt. Enough is enough, don’t raise the limit, live within our means, and get rid of the IRS and replace it with a Flat Tax.

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