Suppose you had a friend who took a major voluntary 10% pay cut several years ago, AND also at the same time decided to start living it up, putting major purchases (everything from expensive wild game hunting vacations abroad to expensive prescription medicines, etc.) on his credit cards, you’d think he was a stupid idiot, right?
Yes, this is dysfunctional. Yes, this is insanity. What kind of family in America would take both a voluntary 10% pay cut AND start living it up, borrowing for major unnecessary expenses? But as we know, this is EXACTLY what our Federal government did, of course. That’s our American family for ya.
Time To Face The Music
But now, hung over after years of wasteful spending, your friend is coming up against his credit card limit. The family knows it has to apply for another credit card. But it also has to do something to address the problem. Now, the prudent thing would be to take TWO sets of actions, right?
- Cut Expenses! Stop spending so much! Prioritize what’s needed and what’s wanted. There is a huge difference. Most wants are not needs. (This includes expensive expeditions abroad.)
- Increase Income! Put an end to the stupid voluntary 10% pay cut. Go out and get a second job to bring in more income.
Sounds like the smart thing to do! If you were somehow to find yourself in such a position, that’s what you would do, right? Does anyone here believe the advice should be to ONLY cut expenses? It would be crazy to suggest ONLY cutting expenses, right?
And yet this is EXACTLY what the House Republicans in Congress are doing! They only want to cut spending. They don’t want to raise taxes or even allow the tax cuts enacted back in 2001 and 2003 to expire. Now don’t think I’m being partial here. I think the Democrats in Congress want to cut too little and the Republicans in Congress don’t want to raise any taxes.
Moral Courage Needed
I’m sorry, but we can’t afford to have what we want in this country anymore. We can only afford to have what we need. We need those people in Congress to have some moral courage to come together and make the tough decisions without regard for powerful corporate lobbying interests, while having some empathy for the poor. There are a lot of things this country doesn’t need, that we are borrowing money to pay for.
Fat chance, right?
My Prediction On This Debt Ceiling Debate
I believe either of two things will happen: The more likely scenario is that the debt ceiling will be yet raised – as it has been 102 times in the past. The deal will be a compromise that doesn’t solve the National Debt problem, likely will create more problems and misery (small increases in the military budget, major decreases in social spending). Like all other debt ceiling increases, it will just kick the can of worms a little further down the road. There will be a nice relief rally in stocks and precious metals will drop somewhat.
The less likely scenario is that our politicians won’t meet the deadline. Parts of government shut down and some people won’t be paid. World markets will dive while precious metals will soar. But then the politicians in Washington will come to their senses and do the above – i.e. a debt ceiling rise and compromise that doesn’t solve the National Debt problem, likely will create more problems, and just kicks the can of worms a little further down the road.