Who is responsible for the financial mess this country is in? Congress has done it and both Democrats and Republicans are responsible. And now both are playing chicken with the debt ceiling for ideological reasons.
IRRESPONSIBLE LAWMAKERS MATCHING WALL STREET
By Loren Steffy
Houston Chronicle
July 13, 2011
Three years ago, Wall Street tried to destroy the global economy. Now, Congress seems determined to take its shot.
Two months ago, the U.S. hit its borrowing limit, and lawmakers have refused to raise it.
They say they're doing this because they want to control runaway federal spending, but they aren't fiscal conservatives. They are fiscal charlatans.
The current debt ceiling crisis results from spending that Congress already passed. Those who refuse to raise the debt ceiling are some of the same lawmakers who ran up trillions on the federal credit card. Now they don't want to pay their bill.
They have already permitted our government to spend about $118 billion more each month than it takes in, excluding interest.
Most of us would agree we should stop doing this, but we can't undo what Congress has already done.
Without borrowing, the government can't pay all its bills, and no one knows what will happen. Technically, Treasury Secretary Timothy Geithner could avoid default by continuing to pay interest on existing debt, and then stop paying other obligations like Social Security and veterans' benefits.
But that's still likely to create the perception that the U.S. is in default. Either way, the likely conse- quences are ugly:
Soaring interest rates — think 30 percent or more - that would crush U.S. households, and make homes and cars unaffordable, plunging those industries back into chaos.
Further devaluing of the dollar, causing the price of petroleum products from gasoline to diapers to skyrocket even as oil-exporting countries abandon the dollar as a reserve currency.
A Black Monday-style stock market collapse that would wipe out whatever savings Americans managed to salvage from the recession.
Scores of small businesses, already struggling to find access to capital, wiped out because what loans are available will be too expensive for many to afford.
And widespread job cuts as a result of plunging consumer demand and sky-high interest rates.
Unable to borrow, the U.S. would be powerless to shield companies or individuals from the ferocity of the economic crisis. At least we couldn't complain about bailouts. The government wouldn't have the money to pay for them, but it wouldn't matter. The economic instability that is likely to follow default is the kind that causes nations to collapse.
It's an outcome so unthinkable that it makes the partisan dithering over taxes and spending cuts seem almost quaint.
In other words, our leaders have lost all perspective. Ideology in Washington has become a zero-sum game. The debt ceiling, once a pedestrian bureaucratic chore - Congress has raised it 74 times since 1962 - has become a political weapon.
As irresponsible as the current bickering is, it will get worse. The debt ceiling has been politicized. This summer's circus is likely to become a perennial political re-enactment, timed to maximize the advantage of one party or another.
Make no mistake: The U.S. debt is out of control. There's simply too much of it, from Washington to the average household. Reducing debt will be painful, but it can be done without plunging the world into chaos.
It's going to take a more courage and leadership than we've seen from either party in Washington. It's going to take our leaders telling us what we don't want to hear: that spending cuts, increased taxes and time are the only way out.
We can and should have a rigorous debate about how those cuts and increases should be implemented, but the first step is to separate the budget negotiations - money Congress wants to spend next year - from the debate over the debt ceiling - money that it already spent this year.
Instead, Congress is imitating Wall Street by attempting to shirk responsibility for the bad decisions it's already made.
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