Monday , 18 June 2018

Opinion: Waging War on the National Debt – Is Financial Armageddon Ahead?

If my neighbor and I are having a dispute about the proper location of our fence, we might choose to negotiate its location.  But if I say that moving it towards me is “off the table”, then I am not negotiating…I’m just arguing.  That is exactly where Republicans and Democrats are now in their “negotiations” on raising the debt limit.

But have no fear, our elected representatives have forgone their weekly vacations to address the difficult job of passing laws that tell us what to do or not to do.  Finally they are negotiating how to raise the debt limit to cover the checks they have already written on our national bank account. As you are probably aware, we are currently overdrawn by over $14 trillion dollars. 

This august group usually spends its time cussing and discussing, passing bills and everyone goes home happy.  That is, until the check hits the bank.  Ever buy a house and not sign the note before you moved in?  They certainly have a nicer banker than I do, and I think my banker is a very nice person.

In Washington they can do that because they are also the banker!  Of course, when the check comes in, it gives both parties the opportunity to grandstand and rail against the other and the bills they passed. That is pretty much what both do now on a regular basis and the topic du jour is the debt limit.

The limit is a cap set by Congress on the amount they can legally borrow. It is supposed to help them control their spending, but it has never been successful.  The first limit authorized almost 100 years ago in 1917 was for $11.5 billion, and it has been raised 73 times since then.  I have absolutely no idea what will happen if they do not raise the limit by the August 2nd deadline, and no one else really does either.  But economists and elected officials from both side of the aisle predict varying degrees of Armageddon if it is not raised and the government defaults on its debt.  They blame everyone but themselves for the situation they now force us to endure. 

Like most things that happen within Washington, this is really all political.  The only thing that matters to our elected officials is who is going to be blamed.  They really do not need to worry about it because there is enough blame to go around for everyone.  It is crazy that they can pass a budget that is not tied to our debt limit, and it is even crazier that we are forced to watch this political theater on a regular basis. 

Life in Washington is tied to the two-year election cycle and the next one in 2012 includes a Presidential election. Republican leadership is caught between a rock and a hard place. The Tea Party faction has driven the Republican Party hard to the right on fiscal issues.  The leadership has seen moderate and sane elected officials lose their seats when voters are energized toward a single issue and NOTHING scares an elected official more than the fear of losing his or her position.

Democrats have a similar, though less invigorated situation with the far left wing of their party.  The rub on this side is a smaller faction than the Tea Party folks, but just as crazy. Led by lightning rod Nancy Pelosi, they are just as adamant about raising taxes and not cutting social programs that are important to their base.

Are we on the edge of financial Armageddon? Stay tuned and hang on.  Hopefully, both sides will fear being blamed enough to actually negotiate a resolution so we can cover the checks they have already been written before we are forced to learn the answer to that question.

Contributed by Andy Hardin, former publisher at “Inside Collin County Business” and “McKinney Magazine”, enjoys discussing and weighing in on politics.

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