US Debt Ceiling: A Blank Check for Congress

November 9, 2015

By: Bobby Casey, Managing Director GWP

Imagine US spending represented as archery. The budget is the target, and coming in under budget is the bulls-eye. The safest place on that field would be the target.

Raising Debt CeilingHave you ever had someone in your family or your circle of friends who always had some ridiculous gimmick? They are really enthusiastic about it, they pitch it hard, but even after you’ve heard them out, the idea just doesn’t sound right? All they need is some seed money to get it started! “Hey, I almost have everything I need to get this ice factory in Alaska going… just need a few more bucks!” Or as was the case with the US government, “Almost got this bridge to nowhere built… almost got something conclusive from this shrimp on a treadmill… almost got everyone forced onto or exempted from health insurance… almost got those terrorists beat… etc.”

President Obama recently suspended the debt ceiling for two years. Basically, the debt ceiling will not be an issue Obama will need to deal with for the balance of his presidency. He kicked the can down the road for the next president to deal with bright and early in 2017.

The POTUS couldn’t stress enough how his signing of this suspension keeps us “safe”. Safety is an American trigger word. It’s how most of our irrational policies glide in for a perfect landing and remain on the books. Safety, coupled with troops and veterans, is emotionally irrefutable. $20 TRILLION in debt, however, is politically inevitable given the proclivities of congress… on BOTH sides of the isle.

A more critical observer would see that for what it really was: daddy giving the kids a limitless credit card. I say critical rather than cynical because on the very day this legislation was signed, US debt grew by $339 BILLION. I doubt the ink from Obama’s signature dried before that money was already borrowed and spent. So we woke up on Friday, October 30th to $18.153 TRILLION in debt and went to bed on Monday, November 2nd $18.492 TRILLION in debt.

This is a pattern of congressional behavior, too; not just an emergency one-off. You might recall in 2012 when there was a call to raise the debt ceiling. Once the ceiling was lifted, $40 BILLION was spent that day and just over a week after that another $60 BILLION was added to that. Upon suspension of the debt ceiling in 2013, congress spent $300 BILLION.

The United States has fallen into a disastrous cycle of thinking throwing money at problems somehow solves them. Unfortunately, many within the voting public have bought into that line of “reasoning” as well. There are memes circulating around social media saying the US should spend more money on education than on prisons, for example. The truth is, the US already spends $12,000 per student per year. That’s plenty to give kids across the US a great private school education of their choosing. More money in education isn’t what’s needed, but rather a total renovation of the approach to teaching and education the states have now.

Another one that is making the rounds is the idea that if corporations and churches paid more in taxes, we could end childhood poverty. If that were true, then the issue is a matter of finding that sum of money, not stealing that sum of money. Certainly the Pentagon could shake their couch and get that figure in loose change alone.

More money and more taxes isn’t the solution. It certainly wasn’t the solution for Solyndra, and it’s not the solution for Obamacare either. The federal government tried to bail out several of the failing and ailing state exchanges, but to no avail.

The federal government is throwing money at college students like mad, and college degrees are losing their once competitive edge.

There was TARP, or the bank bailouts, which was supposed to save the United States from certain doom. Yet, banks are still lending not just to college students, but to under-qualified homebuyers through federally sponsored programs.

The US threw a sizable amount at “stimulating the economy” just to get the U3 unemployment numbers around 5%. But the U6 numbers indicate that many people have just stopped looking or are underemployed. $831 BILLION slated between 2009 and 2019, and here we are in 2015 left wondering if the US economy couldn’t have recovered on its own without that funding in the same ten years? While U3 unemployment indicates we are well below where the Bush administration left the US, the U6 numbers are still higher than they were in 2008.

The US threw money at various “security” measures like the TSA and NSA spying programs which turned out to be total failures at catching would-be terrorists.

The US throws billions at border patrol, and over a million undocumented immigrants are still residing in the United States.

They throw away billions on the war on drugs and still they have not made a single dent in drug possession, use, or addiction.

Ironically, it is the socialists and the fascists who think that money will solve problems. Capitalists on the other hand think the markets would do fine sorting out the issues without state intervention. Solutions come in the form of well thought out ideas and critical thinking, not a legion of bureaucrats and a series of blank checks.

President Obama raised the debt ceiling. The Fed is at zero interest rates and dabbling in negative interest rates as well as a QE4 (if not eventually QE Infinity). But this is all for our own good? What possible good can come from this for you and me? I’m sure there are a select few that are most certainly benefiting from this; but not the average citizen. The US dollar is a mess in the making. Now is a great time to start looking for ways to preserve the value of what you’ve earned and saved. Click here to schedule an appointment to discuss some options.

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