The Debt Ceiling is something that completely baffles some people and I can certainly understand why. Think of it like a cap on your line of credit with a credit card company. They tell you that you can only charge a certain amount to your card. In other words there is a limit to the amount of debt you can have with that company. If you are a good customer with a good repayment history it is likely that the company will up your line of credit. Now the U.S. has a built in “line of credit” known as the debt ceiling. It is a number at which the rules say we can’t spend anymore money and essentially it causes the U.S. to default on loans if we reach this number.
I’m sure anyone who reads the news knows that a few months back we actually hit this number. Now it’s up to Congress to either raise the debt ceiling or balance the budget. It’s obvious to me that the debt ceiling will be raised again. Since 1962, the debt ceiling has been raised 74 times according to an article on CNNMoney from early this year.. At this point you have to stop and ask yourself what’s the point? Is it so congress can feel better about grossly overspending? Do they think that by having a debt ceiling it makes them sound fiscally responsible? I hope that’s not what they think because if it is they are sadly mistaken.
I haven’t decided if I’m for what it would take to achieve a balanced budget but I can tell you that I’m against lying to ourselves and I’m also against band-aid solutions. That’s really all that raising the debt ceiling is if you stop and think about it. The debt ceiling will be raised and everything will appear fine until we hit the new magic number and then we will be right back where we are now.
If the debt ceiling doesn’t get raised it means either drastically cutting spending or a massive tax hike and I don’t know that there are enough lawmakers in Washington who support either option. In the end I think my support lies somewhere between cutting spending and raising taxes (meaning lets try both). The next two weeks will be full of debt ceiling conversation I’m sure.
Alan Kreuger says that the debt ceiling will be raised without incident but I’m fairly certain that a giant media spectacle and battling over it until the last minute does not qualify as “without incident”.
What are your thoughts on the debt ceiling?