Got debt? Do you have credit cards, car loans or a mortgage. If so, what do you suppose would happen if you wrote those who loaned you the money and said you weren't going to pay back what you've already borrowed?
The consequences would be pretty grim. Interest rates on your debt would quickly rise as would the amount creditors expected you to pay each month. Your credit score would drop, limiting your future capability to borrow. And if you defaulted on secured debt like auto and home loans, the assets would be seized. Millions of our fellow Americans face this grim reality now.
Well, raising the US public debt ceiling is much the same as a creditor setting allowable total credit for an individual or business with two differences. First, government can do what individuals and businesses can't - set its own debt limit. Second, raising the debt limit is our collective agreement that we will pay back what we've ALREADY borrowed. Raising the limit protects the full faith and credit of the United States and avoids catastrophic economic consequences we've never faced because we've NEVER failed to acknowledge our collective debt -- NEVER in the entire history of our nation. This is why the US dollar is the world's reserve currency.
According to CNN Money, since 1962, we have raised the debt ceiling 74 times, including 10 times since 2001. All financial bills originate in the House of Representatives, and this House, under the control of the tea party Republicans, is refusing to raise the ceiling. Word they pass among themselves is that not raising it either wouldn't be that serious a problem or, if it is, they'll just blame it on President Obama and the Democrats. That's the crazy game they're playing with our country these days.
In recent newsletters, Representative Francisco Canseco, a former bank director who should know better, repeated the Republican line of opposition to raising the debt ceiling. Here's one of his talking points: "It is time we cut up the national credit card and force government to live within its means, just like American families and small businesses do every day."
Since when have American families and small businesses be able to get along without credit debt?!! Only the rich can buy houses, cars and major appliances without using credit. And thanks to the "trickle-drown" economic policies of the last 30 years, the income of average Americans has been flat. We've been forced to use credit for unexpected medical bills, auto repairs, replacing broken appliances, and other unplanned expenses. Small businesses rely on credit to buy equipment and inventory just to stay in business.
Responsible individuals and small businesses are struggling now to keep from defaulting on their debt. We expect our government to do the same. We do NOT expect our government to operate debt-free. While individuals and businesses are worried about their ABILITY to repay their debt, the US government has the ability -- but the radical right is UNWILLING to do it.
Another talking point: They say it's about "getting Washington's spending addiction under control so that private-sector job creation can once again thrive in America." This is the same argument they made to force continuation of the Bush tax cuts. Republicans, where are the jobs from those tax cuts? All they have accomplished is RAISING the debt. If the Bush tax cuts had never been enacted, today our debt as a percentage of GDP would be a manageable amount under 50% instead of the 70% it is. That's the "revenue problem" Republicans deny we have.
Furthermore, Republicans are the ones with the spending addiction. Our debt has accumulated from the Afghanistan and Iraq wars, which were hidden off the books during GW Bush's administration, and an unfunded drug program that prohibits Medicare from negotiating for lower prices. Furthermore, the recession, which we now know was caused by deregulation of Wall Street, the banksters and the housing market, caused the debt to grow. Tax revenue dropped while essential recovery spending increased.
Now, congressional Republicans want raising the debt ceiling to hinge on huge spending cuts. Hello, people! We're in a major recession and you don't turn that around by cutting government spending. You don't create jobs by cutting jobs. Our economy runs on demand for good and services, not tax cuts for the rich and corporate. And a recovering economy will pay down a lot of the debt.
Furthermore, they refuse to consider spending cuts in areas that contributed to the debt, like military spending. "No, no," they say, "we must keep those military contracts pumping money overseas and out of our economy." They recently refused to end subsidies to oil companies -- one of which, Exxon, recently posted the highest profit of any corporation in the history of history!
Instead, they want to cut spending that actually helps ordinary middle class Americans -- Medicare benefits, education, infrastructure spending. They want to cut the spending that is the REAL job creator in our economy. For what they think will be their political gain in 2012, they want the economy to fail.
Strangely, they refuse to do what responsible individuals and businesses do when faced with debt -- and that is to raise revenue. They maintain corporate tax rates are too high, but the United States has the lowest real corporate tax burden (1.8% of GDP) among the 32 countries in the Organization for Economic Cooperation and Development. In 2009, General Electric paid NO taxes on $10.3 billion in income and took a tax benefit of $1.1 billion. Overall tax revenues (what is really paid) as a percent of GDP are at their lowest level in more than 50 years.
Republicans tout recent surveys in which those polled opposed raising the debt ceiling. Of course! If you misinform people as to the consequences, they're likely to think raising the limit is a bad idea. However, failing to raise the debt limit is a default that will hurt every individual and business in the country. Standard and Poors has already warned that our bond rating will go down. All our interest rates will rise and the value of our assets (property, pensions, savings, etc) will decline. The single weakest part of our economy -- housing -- will be devastated. We'll see an economic collapse far worse than that of 2008. And we will STILL have both our personal and public debt now ever larger.
And Republicans will still be pushing "voodoo economics." Oh, but don't fret about this, Americans. When the economic collapse comes, they'll just blame it on President Obama and the Democrats. Won't that make you feel much better?