Being able to raise the debt ceiling almost at a whim obviously hasn't been much of an incentive for the government to balance the budget and get out of debt. Thus, some politicians, investors and economists argue that not raising the ceiling is now the only way to curb federal spending.The U.S. government is a lot like a person in that it can borrow money. Unlike people, though, with the approval of Congress, the government can raise its debt ceiling - the most its legally allowed to owe - if it hits the current limit. That's sort of like you and I being able to automatically up our credit limit if we've maxed out our cards.
As you may be aware, the issue has caused heated debate this time around. Some members of Congress say the debt ceiling must be raised for the government to keep functioning. Others insist it's high time Uncle Sam learned how to get by without any more borrowing. Clearly, there are two sides to the story. The main pros and cons of raising the debt ceiling.
A higher ceiling only compounds a debt burden that's already unsustainable. If borrowing and spending are left unchecked, the government could owe $20 trillion, maybe more, by 2020. By then, interest payments alone could reach $800 billion a year.
Since the government relies heavily on borrowing to make payments on existing debts, raising the debt ceiling would prevent default on those payments. Not raising the ceiling would result in America's first default ever, and some leaders of the financial community believe that would be disastrous, which would certainly be a painful situation. But those who oppose raising the debt ceiling reason that the emergency would force politicians to focus hard on the debt issue right now, not later. If we were in a position of not being able to pay our debts in the short term, it would concentrate the politicians' minds dramatically.
Highly regarded investor Bill Gross, managing director of the bond investing firm PIMCO, is one such leader. According to Gross, it would be unwise to let the U.S. default because its debt plays a central role in world finance and trade. A U.S. default may severely undermine confidence in the financial system, triggering panic in financial markets around the world.
Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner also support raising the debt ceiling. Bernanke has described a failure to do so as a "recovery-ending event." According to Geithner, not raising the ceiling could spark high interest rates that lead to a worse financial crisis than the one the U.S. is still in the process of recovering from.
According to Moody, we will lose our triple A rating no matter which way we go at this point. Without deep cuts in spending, we have no way of paying back these loans. Now would the other countries lend the US anymore money, unless they want to own us. Question that we really should be asking ourselves.
What did Obama say about the Debt? When he was a Senator.
This is from a speech Obama made in 2006:
"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.
Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion. That is “trillion” with a “T.” That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion.
Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we’ll spend on Medicaid and the State Children’s Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.
And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on. Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities."
Senator Barack Obama
Senate Floor Speech on Public Debt
March 16, 2006
I am in agreement with Michelle Bachman’s statement:
"I am opposed to raising the debt ceiling. We have raised it ten times in the past ten years. and each time Congress has failed to get to the heart of the problem: out-of-control federal spending. Instead of being serious about stopping our government’s spending addiction, we continue to rack up massive annual deficits.
It’s time we stopped being spend thrifts, get realistic, and get our financial house in order. The Debt limit is just the tip of the iceberg when you look at all the unfunded mandates."
So, we the American people have the right to ask why is it right to raise the debt ceiling now. Are all the federal programs somehow more important now? Like shrimp on treadmills, how big gay mens' penis are, billions to the United Nations, money to Brazil to build oil wells in our Gulf and the big one Obamacare. The list goes on and on.
I am so sorry but I am not alright with putting all this debt on our children, grandchildren and great grandchildren, are you? Let's take our hits now and not leave it for the next generation. After all it is our money that theirs' to spend. Why is it that the government doesn't have to ask us how it should be spent?