Tuesday, May 31, 2011

The Sky Isn't Falling: Reality of the Debt Ceiling

The Debt Ceiling battle is officially on in Washington. Last night, the House of Representatives went on record voting against raising the Debt Ceiling.

Democrats and Activist Liberals are (predictably) claiming that if we don't raise the debt ceiling the "full faith and credit of the United States will fail." As usual, Liberals are telling us that the sky will fall and crush everything we hold dear if we don't permit them to spend, spend, and spend some more money that we don't have. Deep down inside this insanity is one of the oldest plays in the Liberal playbook: "If we don't (insert massive spending plan here) then the economy will crash, America will fail to be a nation, we will have fires, floods, earthquakes, dogs and cats will begin living together...mass hysteria!" They even use this posthumously when their policies don't work (see the Stimulus), that if we HADN'T acted, things would've been far worse. Neither one ever has to be proven, so they can claim it all they want without concern.
While we're at it, history is being ignored. In 1985, Congress allowed the debt ceiling to stand pat for nearly three months after the limit was hit. In 1993, more than four months passed after the limit was hit before it was raised. In 2002, again, three months after the limit before the limit was raised. In neither of those cases did the world end. Liberals, of course, care not for history, because it is universally devastating for their case.

Americans largely oppose the raising of the debt ceiling by a rate of 47% to 19% who approve of it (sadly, 34% don't know enough to make a decision). (1) The reason, I believe, is simple. Americans live on budgets. I could not afford to spend 5% above my income via credit, and I know each of you, if you're financially wise, will agree. (The ones who aren’t financially wise and do live above your means; you’ll find out in the coming years that I’m right.) Yet the government consistently spends more 50% above its income and wants to be allowed to borrow more and more to feed their insatiable spending habit.

You see, that's the real problem. In 2010, the Federal Government had total tax receipts of $2.163 Trillion. That's right, over $2 trillion in tax dollars were received. However, the government spent a total of $3.456 Trillion. (2) After some quick math, we find out that they spent 59% MORE than they received in taxes. Can you imagine spending 59% MORE than you take in on an annual basis?

Quick object lesson: Consider a young college graduate in their first real job who is making $30,000 per year. If that person were to spend at the same rate the government spends, that person would be living on $47,700 per year! Considering the current interest rates on credit cards are at 20%, paying only the interest on that debt would come to $9540 per year! Does that sound insane? Well guess what, that's what the government is doing. Except the government is doing that with trillions of dollars instead of thousands, and doing it with somebody else’s money…namely ours! That type of spending is absolutely ridiculous!

I'm a realist, my friends. I recognize that we can't simply decide to go down to precisely the amount of gross receipts immediately. I realize that the only things that are outside of mandatory spending are Social Security, Medicare, Medicaid. I also realize those items can be reduced significantly to a point where they are soluble (that's able to be maintained for more than the next ten years, for those of you from Palm Beach County, FL). That said, the GOP is doing the right thing thus far by demanding not just billions in cuts but trillions in cuts before the debt ceiling can be raised. Similarly, our friend who was listed above, in order to fix his financial house, would need to now live on only $20,460 of his income to be able to fix the problem. Oh, and don’t forget, he’s paying taxes on that salary too, so he has even less of that money. Considering the level of his prodigal living, that individual would need to create a plan to pay off that debt in say, five years. The Federal government must do the same.

Here is the legitimate practicality of that stance: It requires us to deal with both the long term and short term necessities of the situation. We have to cut spending to ensure that we don't completely run out of money in the future. We also need to not try to do it one fowl swoop, because included in the “discretionary spending” are such legitimate necessities as defense.

At the moment, the Democratic Party doesn't want to admit the candy is already gone from the piñata, preferring to instead continue to whack at it in greater desperation, hoping for not just a stray butterscotch candy might fall out but rather to find that there is another compartment not yet opened with many pounds of fresh candy. That's not the case. The money isn’t there. More importantly, the money does not belong to the government, it belongs to taxpayers.

The truth is, as I’ve said since the beginning on this blog, business owners are not serfs. They are not going to simply stay put and pay taxes through the nose just to make Liberals happy. Rather, they will find a way to protect their profits one way or another. The big businesses will move to another state or even another country where the business climate is better. The smaller businesses will have to lay off workers (which means fewer tax dollars from their employees), or close their doors. That is the reality. Liberals can claim pie in the sky clichés like the rich “can afford it” all they want; the wealthy are not going to just hand over their money without any attempt at self preservation. That self preservation has historically meant moving their operations outside of the United States.

Ronald Reagan claimed famously that we don’t have trillion dollar debts because we tax too little, we have trillion dollar debts because we spend too much. Liberals don’t want to admit the piñata is empty, because it would hurt their ability to buy votes with benefits. Yet it comes back to the fact that the money does not belong to them, that they don’t have a right to just take it because they declare a need.

Furthermore, we don’t NEED to spend that much above and beyond. We don’t need to spend millions on Cowboy Poetry or on National Public Radio to spew Liberal ideas. We don’t have the money to pay for the arts with taxpayer dollars, not when we’re borrowing so that we can spend 59% more than we take in.

For the time being, while we work toward a balanced budget, there may be a need to borrow SOME for the necessities. That said it should ONLY be for necessities! In the past, I’ve been forced to spend above my budget using credit cards. When I was fresh out of college and just starting out, sometimes I was forced to spend on my credit cards to repair my car when it needed it and the cash wasn’t available, or to buy groceries when the cupboards were empty. I have not used a credit card to buy a stereo or a television that isn’t in the budget. I simply couldn’t do it then and I don’t do it now. I can’t buy those things on a credit card (at 20% interest rate to boot, and I have good credit).

Liberals don’t want to say goodbye to their Boss Tweed style favors for votes on a national scale. That is what this is about. The Republican Party, at least for now, has told the Democratic Party that they can stick it; you can’t borrow more money to give away. I’ve said it before and I’ll say it again, when the GOP drops the ball, we need to hammer them, but when they are carrying the ball and advancing toward the end zone, we need to get their back. At this moment, they’re doing right by the taxpayers.

To you Liberals who read this blog: The sky is not falling. The Democratic Party has played you for a fool when they have previously claimed that the sky would fall if we didn’t pass (insert massive spending package here). It never has, because it’s an ad hoc argument. It’s baloney, quite frankly. It’s time to get our spending in check. The piñata is empty, and the candy in the piñata doesn’t belong to you Liberals to begin with. It’s time to start living within our means.


(1) Americans Oppose Raising Debt Ceiling, 47% to 19%

(2) US Government Tax Data

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