When is a ceiling not a ceiling and when is a crisis not a crisis?
The media and our politicians in Washington, both Democrat and Republican, are having a field day discussing the impending “crisis” that will ensue if the debt “ceiling” is not raised. Of course, as the Democrats would have it, the debt ceiling is the problem. On the other side, spending is the problem. Spending has never been much of a problem for Republicans either until the Tea Party came on the scene and elected Republicans, with some fiscal sensibilities, to the House of Representatives.
To answer the question “when is a ceiling not a ceiling”, you have to go to what has happened since the first ceiling of $11.5 billion was set in 1917. During WWII, they seem to have lost count as to the number of times it was raised, but since 1962 the debt “ceiling” has been raised 74 times. Warren Buffett says we should do away with the ceiling which is an “artificial limit” and “all it does is slow down a process and divert people’s energy, causes people to posture. It doesn’t really make any sense,” Moody’s Investor Service, one of the agencies that is threatening to downgrade the US bond rating, strongly agrees. Obviously the “ceiling” is a misnomer and means absolutely nothing. The real problem, as with many families, is that the government is living beyond its means. Our Representatives, Senators and President pass legislation that costs taxpayers billions and even trillions of dollars with no regard for our rising debt. Every household wishes they could do the same.
Our top politicians are currently working behind closed doors with the President to come up with a solution to our current “crisis”. What has leaked out can only be what Buffett would call “posturing”. Both Republicans and Democrats talk about trillions of dollars in spending cuts, conveniently, over the next ten years. Sounds good until you realize they are not talking about actual cuts in spending, they are talking about reducing “increases” in spending, none of which will balance our budget and start to reduce our dependency on China as a benefactor to our Treasury.
It is interesting to note, that we hit the current debt ceiling of $14.294 Trillion, sometime around May 17th of this year. Using bookkeeping techniques and delaying payment to government employees’ pension funds, Treasury Secretary Geithner now has established August 2nd as the critical date. At that time portions of the Federal Government will have to be shut down. Some in government, the President included, will try to frighten Social Security, Medicare and Veteran’s benefits receivers into thinking they are first in line for cutbacks. If I were in charge, the UN, foreign aid, the EPA, the Department of Education, ObamaCare, High Speed Rail and the Energy Department would have more to worry about.
Currently, because of the slanted MSM coverage, Republicans are being blamed for the current “crisis”. What has actually happened? For two years, the Democrats, while they were in charge of both houses of Congress and the Presidency, and spending was going through the roof, failed to pass even one budget. This is in violation of the Congressional Budget Act. The budget set forth this year by President Obama was a joke which increased spending and taxes to such an extreme that it garnered zero votes in the Democrat controlled Senate. The Senate has not proposed a budget of its own.
However, the Republican House has met its Congressional Budget Act responsibilities earlier by passing what is known as the “Ryan” budget. The Senate refused to take up the bill and refused to debate two other bills proposed by Republican Senators. To raise the debt “ceiling” and avert the current “crisis”, the Republican House has passed the Cut, Cap and Balance Act, which intends to cut actual spending, place a cap on the debt ceiling and create a balanced budget amendment to the Constitution. Harry Reid, Democrat leader of the Senate has refused to bring this legislation to the floor for consideration. Instead the Democrats are insisting on the closed door sessions with the President and the Gang of Six to come up with a compromise.
The Republicans have put it out there on the table where it can be dissected by all. What do we get from the Democrats? The President came out with a “plan” back in April. When asked what effect it would have, Congressional Budget Office director Doug Elmendorf replied with a devastating “We don’t estimate speeches.” You can’t assign numbers to air.