Are The Republicans Sort Of Right About The Debt Ceiling?

No, this is not a Robbie Republican post. And I'm not saying that holding the economy hostage in order to destroy Obamacare is a sound strategy or a goal we should be striving towards. But at the very heart of things, when you get down to it, there is an aggravating factor that's led us down this path, one that nobody has done anything about since the Clinton administration: the insane growth of the national debt and our horribly unbalanced federal budget.

Now, let me be clear. Refusing to raise the debt ceiling does not reduce the national debt. In fact, if the debt ceiling isn't raised, and we default (can't pay our bondholders), then the national debt will actually increase. You don't reduce your credit card debt by refusing to pay your bills, and the government can't reduce it's debt by refusing to pay its bills. We need to borrow, because we have bills to pay, and not enough tax revenue comes in to cover them. If we didn't borrow money, bills don't get paid, our bonds are worth trash, the dollar loses value, and suddenly, the economy takes a tailspin, reducing tax revenues further, because suddenly everyone's out of a job. It's a crazy mess.

This is why we haven't defaulted. This is why we won't EVER default. This is why Boehner and co. are going to agree to raise the debt ceiling again, despite their whole stink about it. Because they realize a default won't do a thing to reduce our debt, and will leave us far, far worse off.

So why the stink every few months? Why the "hostage taking"? Well, at the very least, it's sparking a conversation. And so far, what's come out of that conversation has been positive for Republicans.

As I said back in December, forecasting our nation's future after falling over the "fiscal cliff":

Yes, taxes go up. Yes, defense spending is cut drastically. But both of these issues are temporary, and everyone knows it. It's very, very easy to cut taxes. It's very, very easy to justify defense spending with the global threats America faces. If no deal is struck by January 2nd, taxes will rise and defense budgets will be cut, sure. But by next January 2nd, it's very likely that taxes and defense spending will be restored to somewhere near their current levels.

The other programs? Programs for the poor and middle class? Programs for the arts and sciences? Programs for education? The Democratic desire to restore funding to these initiatives will be met with fierce resistance from the Republican caucus, and the public support behind them will not be strong enough to overcome it.

 Well, folks, we did fall over the fiscal cliff. The sequester did come into effect. And what happened? Exactly what I said would come to pass.  Military and security budgets have slowly been restored, but the other deep cuts, to programs on the Democratic side of the ledger, remain in place.

The debt ceiling threat is not intended to be a threat, because a threat can actually be carried out. What is it then? A protest. A demonstration. It's intended to rally their side in a battle for more cuts to government programs that Republicans hate. One of those programs is Obamacare.

The Republicans are right to protest increasing government debt. In that sense, the debt ceiling holdout, repeated, again and again, keeps the national conversation coming back to the budget. And that alone is not a bad thing. We need a balanced budget. We need to stop owing so much elsewhere. It is time to get something done on that front, after George W. Bush ignored it for 8 years.

Of course, that's where the Republican high ground ends. Because they're unwilling to tackle both sides of the issue--spending AND revenue. You can't just cut government programs suddenly and completely. It'll create a humanitarian disaster within our borders. A single parent family on food stamps won't immediately be able to pick themselves up by their bootstraps-- its not that easy. If it was, they would have done it already. Corporate taxes and the amount millionaires squirrel away are a joke. The rich enjoy enormous benefits of our free, safe, capitalistic society, and unfettered access to the halls of power-- they should pay for that. And I don't mean in the form of campaign contributions. You can't solve the national debt by cutting alone-- the math doesn't add up. It's just like how corporations can't improve their fortunes solely by firing workers or fixing inefficiencies.... eventually, they have to bring in money. The government can't invent the next iPhone... the only way to bring in more money is by raising taxes, preferably on people who will feel the "pain" the least.

So, yay to the Republicans for keeping an eye on the ball, the long term fiscal health of our nation. But unless they start getting realistic, instead of idealistic, we're not going to get anywhere.

Point of No Return

"Just as a consumer with a lower credit score has to pay higher interest rates on their credit card, a downgrade of the Treasury's debt rating would raise the cost of borrowing. That would increase the nation's interest payments on fresh debt, driving the government even deeper into deficit." -MSNBC

Keeping the debt ceiling the way it is won't reduce debt. It will increase it. All Congress needs to do is do what they've always done for every other president since the beginning of time, including President Bush I and II and President Reagan. The Republicans refuse. Because?

Well, two theories.

One, they really are that stupid. They really do think that debt ceiling and debt are the same thing, and by refusing to raise the ceiling, they're somehow magically reducing debt.

Two, they really want this disaster. They hope for it. With the economy finally starting to recover, they see their chances of power slipping away. If the country crashes, they can play the blame game and convince people it's somehow all the democrats fault.

Anyone have a reason that actually makes the Republicans look smart and not evil? Let me know. I'd love to hear it.

Apocalypse Now

Obama walked out on Eric Cantor yesterday. Good for him.

Keeping the debt ceiling the same will not reduce the national debt. It will not create jobs or end welfare once and for all. The only thing it will do is cause the United States to lose it's position of power in the world, most likely permanently.

Why? Well, lets put it this way. Having debt is bad. Not paying your debts... that's worse.

Unless the debt ceiling is raised, the U.S. will not have enough cash to meet it's financial obligations. Which, yes, includes entitlements and checks for government workers (republicans don't really give a crap about that), but which also includes people who hold American bonds. Bonds are the things the United States sells when they need to borrow... they're like an IOU. People buy those IOUs because they know the United States is good for it. The U.S. is good for it because they can always issue more bonds to raise money to pay off those cashing in their bonds. Yes, the U.S. borrows money to pay it's debts. Maybe you've done the same thing, asking your parents for some money to pay off your credit card bill.

If the U.S. can no longer borrow money to pay its workers or impoverished people, the thinking goes, they will also not be able to pay bondholders. Those IOUs become worthless slips of paper. And that's when everybody stops buying U.S. bonds. And that's when the people who own U.S. bonds get mad that they're never getting their money back. And most of those bond holders are other countries with only friendly-because-its-financially-prudent ties to us.

Do you see where I'm going with this? We don't raise the debt ceiling, suddenly our government doesn't get paid. And while it's nice to pretend the people who help run this country would gladly work for free... that's not the case. Social services, protective services, everything we rely on to keep us safe begins to fall apart. The impoverished people of this country suddenly lose their homes. Families starve. Inevitable backlash ensues. Violence. Chaos.

Then the other countries who hold our bonds, China, Saudi Arabia, no longer have any financial incentive to help us in any way. Terrorism efforts fall by the wayside. Even our soldiers don't get paid.

America falls to pieces. And the pieces are so worthless nobody wants to pick them up.

Maybe anarchy sounds pretty good to Eric Cantor. But it sounds damn scary to me. Let's reduce the national debt... not destroy our nation.

How Republicans Are Holding You, And America, Hostage

Debt is bad. We all know that, right? That's why your parents always tell you to pay down your credit cards, why Free Credit Score Dot Com commercials warn you won't get that car of your dreams. Debt leads to losing everything you own, ending only in suicide or starvation.

So it stands to reason that debt is also bad for America. If the deficit grows, the future of America should be just as bleak, ending in the break-up of the United States into tiny, feudal kingdoms, ruled by armed thugs wearing spike studded football shoulder pads driving around in flame-throwing motorcycles.

So why, good Americans, would we raise the "debt ceiling" without first cutting spending? Republicans, good stewards of our economy who have never, ever increased the national debt, ever, ever ever, are asking that question. And they're also answering that question, refusing to raise the debt ceiling unless austere measures are taken by those out-of-control Democrats.

There's just one problem.

The debt ceiling is not the same thing as the national debt.

Let that marinate for a moment. "National Debt" and "Debt Ceiling" both have the word "Debt" in it, so to an unintelligent person, they may look the same. But they're not.

"National Debt" is how much we're in the hole. "Debt Ceiling" is how much we're allowed to borrow.

While a higher debt ceiling means more borrowing, and therefore, a higher national debt, this DOES NOT MEAN THAT KEEPING THE DEBT CEILING AS IT IS REDUCES THE NATIONAL DEBT OR KEEPS IT THE SAME.

In fact, it actually causes the opposite to happen.

The U.S. is at the debt limit now. And that means it can no longer borrow money. We've established that the government now runs a deficit, and has very large debt. So if it can no longer borrow money, that means it can no longer pay its bills.

According to Slate:

The Treasury would no longer be able to issue new bonds, meaning that the United States would eventually start failing to pay its bills (like Social Security payments) and to service its outstanding debt (paying bondholders interest). The world bond market would likely panic, raising borrowing costs for all individuals and businesses. Moreover, the United States' borrowing costs would never fall as low again—investors would never fully trust the United States to pay back what it promises.

That's just the first stage. Then the stock market collapses to Great Depression levels. Millions are laid off overnight. The U.S. is no longer the world's superpower. We're Greece.

In other words, the apocalypse happens now.

With businesses failing and millions out of work, the U.S. tax base shrinks. Not only can the government not afford to pay anybody, now, it doesn't even have the money to keep the lights on in the Capitol building.

The United States breaks up into tiny, feudal kingdoms, ruled by armed thugs wearing spike studded football shoulder pads driving around in flame-throwing motorcycles.

This is reality. It's undisputed. Failing to raise the debt ceiling will be a catastrophe that will permanently end America as we know it.

And the Republicans are threatening to do it.

Hmm. Maybe these guys are on to something.

It's the equivalent to threatening a bank robber with a nuclear detonation if he doesn't put down the gun. Sure, a nuke would stop the bank from being robbed, but... you know... the bank's kind of a moot point after the mushroom cloud.

Debt is bad. We all know it is. But there are better ways to force the government to take it seriously other than threatening the extinction of the United States. There's better ways to reduce the national debt than reducing our country to ashes.

It's time to tell the Republicans to put down the nukes already.