Ok, what we know is that Congress needs to vote to raise the debt ceiling of the United States of America by August 2. Our debt will be $14.29 Trillion at that time and we still need to have room to take on more debt!
Why do you think we need to have room to add more debt? Well, the answer is simple. 18% percent of every dollar the government spends goes to interest. Yes, that is right; it goes to pay interest on the existing debt. So what is happening is that the debt never gets reduced; it only goes up because we don’t have a surplus of revenues over expenses.
To put this in simpler terms; it is just like the mortgage loans that were made to help create our current economic crisis. They just paid interest and in many cases did not even pay enough to cover the interest so the balance of principle went up. That is where our country is right now. To put it in even more simpler terms; no economic unit can continuously spend more than it takes in. That is the road to bankruptcy!
Now the parties are arguing about how to fix the current mess that they and their predecessors created. The Democrats want to cut some spending and raise taxes by eliminating the Bush tax cuts among other things. The Republicans want to cut a lot of spending and leave taxes alone. All this is in return for raising the debt ceiling, which is a conceptual problem all by itself. So they have been at a standoff.
Before I go any further, do you know that all the income taxes paid in this country are paid by only 50% of the people? What, how can this be? Well, with all the entitlement programs and all the tax breaks for low earners and low tax brackets themselves that is how it all works out. Now, I will grant that much of this is needed. But, taken as a whole, 50% don’t pay any taxes? The burden of running our massive government (a problem in itself) falls on only one half of the tax paying public!
Now back to the question of how to get everyone off dead center and make something happen by August 2 because if nothing happens by then do you have any idea of the economic turmoil that will be created? The bond market goes crazy and interest rates sky rocket because no one has confidence in US government bonds. The stock market probably craters due to the anticipated effect on our economy. We will see a recession like we have never seen before both in terms of degree and length!
We currently have grown adult Congress people acting like children; not just the Democrats but the Republicans as well. In fact, our very own (I live in Virginia) Eric Cantor is leading the way in childishness.
What is the right solution? Seems kind of easy doesn’t it. Only agree to raise the debt level if substantial expenses are cut (3 to 4 Trillion) and ok, yes, let’s close a few tax loopholes (there are many to choose from). While we are at it; let’s pass a balanced budget amendment. Also, let’s take the payroll ceiling off Social Security Earnings and make the cost of living formula more realistic. Make some changes in Medicare to reduce costs. Most important, if we close some tax loopholes, some of those must be to increase the percentage of people actually paying taxes.
Lastly, we need to make some changes in how Congress works. For example, they don’t have the same health care plans as we do, they don’t have to abide by insider trading rules (nor does their staff), they get a full pension after working in Congress for only 4 years, they vote themselves raises when they want to, they take advantage of overseas travel for themselves, their spouses and their staff, etc. All this needs to change!
What can you do? Several things. First of all you can write or email your Congress people and tell them to quit playing games and get something done. Second of all, if they don’t, vote them out. In fact, until they quit acting like children on all issues, we should keep voting them out until we get some people in there who want to do good things for the country instead of trying to get reelected 24/7!