Tuesday, January 4, 2011
The Politics of The Debt Ceiling.
Lately, the Rich People's Anti American Republican Party has been voicing its latest "concern" for Americans which it says is the "grave" consequences our children and grand-children will face financially if our debt ceiling is raised, as will be required pretty soon. Their agents have been making the rounds in talk shows and news shows around the country, positing very strongly that raising the debt ceiling will be debilitating to the future of our dear country and pledging to vote against and kill any bill that will suggest us committing that suicide.
For those who do not know what the debt ceiling is, let's explain it this way; America has a set limit of the amount of money it can borrow which can not be exceeded without an act of congress. This limit is called the debt ceiling and is presently set at $14.3 trillion. Given the financial and economic crises the country has faced over the past couple of years caused by the unpaid for tax cuts for the rich and wars of the Bush presidency, and the required spending spree embarked upon by the Obama administration in order to stem the slide and stimulate the economy back into buoyancy, our country will hit the debt ceiling in a matter of months.
Now, to talk about the true meaning of the debt ceiling and what it means not to raise it. The debt ceiling, in lay terms, is America's credit rating. As the big kahuna of world economy, the only thing to do when we hit the debt ceiling, as we will do shortly, is to raise it because not doing so holds dire consequences, not only for us, but for all of the world's economic well being. Not raising the debt ceiling will bring us from a credit rating of about 2000 to zero which will take our country from credit worthiness to credit worthlessness. Now, as an individual, you know what happens to you when have a low or no credit rating. You can't do anything, including getting loans, buying things like houses, cars or, even renting a house to live in. Despite all of that, for you it's different because as an individual, you have the recourse of bankruptcy.
This means that if your creditors become too much trouble, you could declare bankruptcy and be done with it. No matter how unsavory that might be, at least, you have that recourse. For a country like ours, declaring bankruptcy is not an option, for many reasons a few of which I'll state here. The most important reason is that when a country goes bankrupt it has become worthless and dead meaning that nobody will want to do business with it anymore. It means that the country can no longer honor it's commitments both financial and otherwise. Most importantly, it means that the country is no longer credit worthy and cannot get loans from anywhere, be they other countries or financial institutions. It means that the country has defaulted or will default on loans already received thereby killing off any hopes of getting any future loans.
Bankruptcy simply means the death of any country and that is what not raising this debt ceiling will push America into. And being the world's number one economic power means that a bankrupt America will have a very negative ripple effect across the world's economies unlike any ever seen. The Republican Party knows these facts as do their sponsors, the rich, who stand to lose a lot if this scenario ever comes to pass. That party's leader in congress Rep. John Boehner said so himself in an interview when he said that congress has no choice than to raise the ceiling as not doing so would have a cataclysmic effect on the nation. He hoped that congressmen will approach the situation as adults when the time comes to do something about it.
What this says is that all the noise about voting to block raising the debt ceiling is nothing more than Republicans bluffing the president in order to score some policy goal for themselves and their sponsors. What that goal is has not yet been made public but we will know sooner than later. They know that the president is not very good at this negotiating business, a realization they confirmed while getting the extra tax cut extension for their sponsors through bluffing about holding tax cuts for all Americans hostage.
This posturing is in anticipation of the soon to be made attempt by congress to pass the law that will be required to raise the ceiling and allow the country to borrow more money beyond the $14.3 trillion, in order to keep the country running. In other words, the Republican Party, once more, threatening to shut down government unless they get something for the rich. That is what they do, that is all they are about, the question being whether the president will have the guts to call their bluff this time?
The president has not had the guts to call their previous bluffs which has given them the recklessness to keep churning out these bluffs and getting away with it. He should call their bluff this time so that we can find out whether they are willing to harm their benefactors just to score a political point on the president. But we all know the answer to that one.