The Stupid, Unnecessary Battle Over Raising The American Public Debt Ceiling

The Burden

Will It Be Deja Vu All Over Again?

NEXT MONTH, FEBRUARY 2015, RAISING THE DEBT CEILING becomes what use to be a routine chore brought about by a self-imposed requirement from the Great Depression. Article 1 of the Constitution gives Congress the right take on debt to pay America's obligations. During the Great Depression, Congress gave that authority to the Treasury, but to keep that action Constitutional, they imposed an upper limit, in other words, a "debt ceiling". Consequently, since Congress, except during 1999 and 2000, continues to run a deficit which means bills keep mounting up. Sooner or later the Treasury runs out of debt authority to pay bills that come in the mail.

Since there are rumblings within the Conservative caucus to repeat the debacle of 2011, I thought I would dust this Hub off and republish it. Since I wrote this article, Conservatives got their wish, America's debt rating was lowered and the compromise that resulted had nothing in it which benefitted them in the "short-term"; so on that front, they lost. What it did have in it was what was supposed to have been a "poison pill" which would force the two sides to compromise for the alternative was draconian budget cuts to both defense (to incentivize the Right) and non-defense (to entice the Left) programs; it was called "The Sequester".

To the surprise of no one, the Right would not give a meaningful inch on their demands and the Left would not cave to all of the Right's demands, therefore no compromise occurred in Dec 2011. And America has been suffering ever since as the effects of sequestration shaved a percentage point or two off of GDP growth.

A later debt ceiling crisis was averted by giving Congress to spend what it needed, under certain restrictions, until Feb 2015; which is where we find ourselves today. There is a BIG difference, however. Those on the far Right who created the 2011 disaster lost power within their own Party. Granted, the 2014 mid-terms gave control of the Senate to the Republicans and deepened the Republican majority in the House; the dynamics are entirely different.

The far Right tried to increase their gains within the Party but failed miserably. With one or two exceptions, those Republicans who did win were run-of-mill fiscal/social conservatives ALONG WITH a few moderates in the North. Also, they have the experience of failure and being blamed for the down-rating of American debt. As a result, the Conservative leadership has vowed to not let the nation be downgraded any further. Unfortunately for them, many on the far Right, like Sen Cruz, have different ideas. As before, these politicians appear not to mind hurting America to score ideological points. This time that means defunding ACA (and put the millions of Americans who now have insurance because of ACA back into the ranks of the uninsured) AND stop helping long-term immigrants which most economists will improve GDP.

We will now see if Leader McConnell and Speaker Boehner have the ability to keep their troops in line.

WHAT IS THE PUBLIC DEBT?

THIS FALSE FIGHT THE CONSERVATIVES HAVE CREATED over raising the public debt would be funny, it really would be laughable if the consequences of not doing it weren't so damn dangerous if they are successful. Their reasoning proves they haven't a clue as to how the federal budget process works or, if they do, then they don't mind "misrepresenting" the truth to the American people over and over and over again; take your pick because, as you will see, it has to be one or the other.

What is the public debt? It is simply the amount of money America owes from what it has borrowed to pay for programs PREVIOUSLY signed into law. The Constitution prevents the Treasury Department from paying cash out of the treasury if there isn't the money there to do it. There are two primary ways the Treasury receives cash; from taxes and from the sale of bonds, which is debt. Normally, debt is taken on in times of war or other emergencies and has often been paid off before the next emergency arises, or at least that was the original idea. But after WW I, the Great Depression, and WW II, we weren't so lucky for the accumulated debt was huge but manageable because the marginal tax rate was high. It wasn't until the latter part of President Reagan's administration did the amount of debt, relative to the GDP, become a real problem that had to be addressed; and it hasn't been the same since.

Reaganomics made structural changes in the way government did business regarding tax and spending policies that left the country with its first out of control deficit and, in the following years, an unsustainable, ballooning public debt; just like what we are faced with in 2011. Under the first President Bush and President Clinton, things were brought back under control and the country experienced surpluses and a public debt whose growth was quickly decelerating; in one more year, it would have had real decline but that was 2002 and it never happened. In 2002, the second President Bush effectively reintroduced Reaganomics and history repeated itself. Before the Great Recession of 2008, the deficit was once more out of control and the public debt had quadrupled and was on its way to double once more. All of this happened BEFORE President Obama's Stimulus (as it has turned out, the TARP hasn't contributed a significant amount to the deficit or the debt).

Finally, the coup de grace was President Obama's efforts to prevent total catastrophe from happening as a result of the 2008 recession and undo the damage that has already been caused; this required the expenditure of a great deal of money and still requires even more. If you don't believe me, you turn to my Hub on the 1873 Depression; you will see the consequences of government inaction in the face of an economic collapse. So that is where we stand today; booming deficits and soon to be booming public debt, EVEN IF WE HAVE A BALANCED BUDGET FROM THIS DAY FORWARD, i.e., revenues equal outgo from existing programs and any new programs, not counting normal inflation. Why? Two reasons, interest and preplanned allowance for program growth that cannot be predicted with certainty at the time the program was passed.

Boy, How It Grows

SO WHAT'S THE PROBLEM

THE CONSERVATIVES WANT TO HOLD AMERICA HOSTAGE in order to wring more FUTURE budget concessions out of the Democrats be for they will allow America to honor its PAST obligations. Exactly how American is that? Not very, in my book. What America isn't asking the Conservatives to do is raise the debt ceiling so much as to accommodate obligations that will be accrued in the 2012 budget and beyond, no; what is being asked for is for America to raise its debt ceiling enough to honor its debt, a long standing, proud, ethical American tradition.

Instead, when you blow away all of the fog of rhetoric, what the Conservative's bottom line is that they are willing to let America go effectively go into a sort of bankruptcy if the Democrats don't cave in and give them what they want now for the 2012 budget rather than debating it at the appropriate time during discussions ON the 2012 budget. Instead, the Conservatives obfuscate the arguments by couching them in terms that have nothing to do with public debt, which is dealing with the past. They should be worrying about how to fight the 2012 budget battles which is dealing with the future.

COMMENTARY ON THE PUBLIC'S STUPIDITY ABOUT THE CONSEQUENCES OF FAILING TO RAISE THE DEBT CEILING.

I am guessing from the news reports that most Americans have been conned by conservative propaganda, for it seems a majority actually believe it is no big whoop if America runs out of ceiling come August 2, 2011. I don't get it. You have virtually every expert in the field speaking out about the disaster that would befall us if that were to happen; the Great Depression would be a walk in the park by comparison. I heard one commentator ask another why this was. The answer was "because they have never experienced one."

I find this fascinating, but when I stop to think about it, I suppose he is right, sadly so. It is beyond my comprehension that so many people cannot connect the dots or draw the comparison between failing to meet their personal debts and what happens to their families when all is lost to what happens to a country when essentially the same thing happens. The whole country is still living through the aftermath of the Great Recession of 2008 and they can't see that this would just be the first act of something worse if America defaulted on its debt? I just don't get it, but it is true that they don't.

© 2011 My Esoteric

More by this Author


Comments 15 comments

HSchneider 5 years ago from Parsippany, New Jersey

Great Hub. I pray the saner heads in the Republican party will soon hold sway over these crazy Tea Partiers. They must pound some sense in them and pass the legislation to raise the debt ceiling. This is no game. You are right that the devastation to our economy when our credit falls to crap will cause a very Great Depression.


Mr. Happy profile image

Mr. Happy 5 years ago from Toronto, Canada

Everyone (individuals and countries) is going to default on their debt sooner or later anyway. I would say just get it over and done with. The System as it is now, with bankers milking societies and the common man in general, all over the world, has to collapse. It will do so from within, even if we as humans are not bright-enough to put an end to it; it will collapse due to greed, selfishness and the corruption which has infiltrated all levels of government and business.

These are interesting times. Great blog, by the way!


My Esoteric profile image

My Esoteric 5 years ago from Keystone Heights, FL Author

Thanks HSchneider, I do to.

Mr. Happy - thanks again for you comment. The problem is, America just isn't any other country. If America goes down, it takes the world with it; Russia, China, India, England France, Germany, Canada, the whole damn world. If Italy goes down, that won't happen. If Greece goes down, that won't happen. Even if Greece and Italy fail, that won't happen. Also, if you want to get an idea of what might happen in America, read my hub on the 1873 depression in Short History on American Recessions. It lasted 12 years and took down 17,000 businesses, if I remember right, with it, this is in 1873 remember. Then there was the Great Depression in 1929 with its over 20% unemployment. These are probably the best case scenarios if America defaults seriously on its debt. I really hope you don't seriously want that to happen.


mib56789 5 years ago

A "false fight". Shhh ... Someone in politics might be reading your HUB!! Have you ever considered running for public office? Or least working for someone in a public office and whispering in their ear from time to time? And you are correct in your assessment. Not bragging, but America is not just any other country. My husband was speaking to his relatives back in The Bahamas about America's economic crisis and one of them remarked: "Yeah! It's affecting us too!" I wonder how many other people in other countries make that same remark. Great HUB!


Mr. Happy profile image

Mr. Happy 5 years ago from Toronto, Canada

Mr. Esoteric, I understand your concern. I also understand that America is not Greece. Of course, I understand - I live in Toronto. If you guys have a bad day - we feel the heat up here and since your pockets have gotten thinner so have ours - most of our exports go your way.

I have not read the article on the depression but I will as soon as I am done here. Will an article on famine, despair and pain deter me from thinking that defaulting on the world debt is a bad thing? I highly doubt it.

Am I heartless and want to see people starving on the streets?

The WFP (World Food Program) reports that over 30,000 children die each day of hunger related diseases. People are already starving, we are already in the gutter ... I do think sometimes one must go backwards to go forward - I am thinking we're on a dead-end trail for now.

Back to the world-debt though: I want to see the IMF crumble to pieces; I want every Rockefeller, every Rothschild and every member of the Bilderberg Group, Trilateral Commission and the Council on Foreign Relations, to fall back in the same group with everyone else. We need to free ourselves from their influence/ grip. How will that happen?

No, I am not smiling at what is to come but it will be necessary. So, yes default all the way: on a personal level and as countries - this is where we're going anyway, whether we like it or not. The wheel will always keep turning.


My Esoteric profile image

My Esoteric 5 years ago from Keystone Heights, FL Author

Thank you very much MB56789. My preference is the wispering and would find that very exciting. I am an introvert to the max and go into brain freeze on the public platform when my memory fails, as it frequently does. When I am talking about my my job from power points, it is normally another story, but take those crutches away ... disaster. In my former life as a civilian with the Air Force, I have briefed my technical analyses at levels as high as the Secretary of the Air Force and a couple of levels down from the Secretary of Defense a few times so I am no stranger to the big time nor Washington DC, but, I rarely had a chance to deal with politicians. But to be able to get into advisory positions like you suggest, you have to know how to network or promote your writings, and, I don't know how to do either. That lack of ability ended up being a career stopper.


My Esoteric profile image

My Esoteric 5 years ago from Keystone Heights, FL Author

Mr. Happy, you and I might have more things in common than meets the eye. My favorite whipping boy, besides Conservatives, is the Corporate, especially the financial, world; the Rockefellers and Rothschilds you mention. I am not as worried about the Bilderberg Group (had to look that one up), the Trilateral Commission, and especially the Council of Foreign Relations, which I did a bit of research on for my very first hub. They do weild quite a bit of power, no doubt, because they are made up of the movers and shakers in the political and business world. Their goal, at least the CFR's goal, is to vet policy alternatives on important questions of the day. The CFR, at least, while made up of select, by invitation only members, is diverse both politically, in ethnicity, gender, and background. One of my favorite members is Fareed Zakaria, a CNN international news reporter that I highly respect.

Consider the outcome if what you want happens; if all of these people and organizations collapse and lose their influence, both good and bad, over our lives. How far will human society have to be set back to compensate for their loss, to function without what they provided to society?

Like it or not, they are the ones that provide the organization for society to function in a manner that keeps us out of the Stone Age. They have existed in one form or another since humans moved passed existing in small family groups and organzed into villages. As you moved from villages to cities to city-states to states to nations to an integrated world community, these corporations and influencial groups simply grew in size and adapted to the changing situation, but they have always exist. If they collapse, they will simply reappear, as disheatening as that may seem, it is just built-in human nature; modern society cannot function without them.

But don't despair Mr. Happy, all is not lost. at least in societies like Canada and America. Our political systems allow for a way out if its citizens have enough gumption to use it; their vote. The fundamental fact is at the end of the day, in our societies these corporations and brain trust policy development groups and lobbiest don't control the politicians, the voter does, IF and this is a truly big if, the voter chooses to do so.

Occasionally we show signs of wanting to do so, intelligently or unintelligently; 2010 was an example of the voters reacting violently in an unintelligent manner, in my opinion of course.

When you can't win your battle by eliminating your opponent, win it by cornering them and taking away their space to operate in.


Mr. Happy profile image

Mr. Happy 5 years ago from Toronto, Canada

Indeed Mr. Esoteric, we do have some things in common.

I must say though ... having to Google the Bilderberg Group does not make me happy. Why? It just shows me that indeed, they can maneuver the world from behind closed curtains and hardly anyone knows about it. I gotta give those bastards credit for that. There's a hip-hop line which I love and fits here beautifully: "Real gangstas walk in silence". It's the truth. The dog that barks, hardly bites. It's the quiet one you should be worrying about.

Check this out if you have time: http://www.bilderberg.org/bernhard.htm - Prince Bernhard of the Netherlands, who started the Bilderberg Group was an SS Nazi officer ... but Bush's grand-daddy also did business with the Nazis ... Americans don't seem to care ...

Fareed Zakaria is perhaps one of the more enlightened members but he is ultimately a toy ... or a messenger (since he works for CNN - I know who he is, the brown-skin guy, middle-aged ...). By invitation only screams of fascism but that's how all those secretive groups are ... what democracy? It's a myth.

Vote for whom Mr. Esoteric? Read my article and you'll see that there is no difference, voting is a farce now: http://hubpages.com/business/Fii-pregatit-Be-ready

How long are we going to pretend that this game works? I'm waiting, it's all good - I am in no position of despair but I see many who are. Honestly, I could just go fishing and ignore the world - I am not starving, I haven't lost any houses or anything ... what do I care ultimately ... right?


My Esoteric profile image

My Esoteric 5 years ago from Keystone Heights, FL Author

True, Mr. Happy, you don't have to care, but it is clear that you do. Even as extreme, to me anyway, as your views appear to be, you have them and you express them in a non-threatening, thoughtful way. It certainly is one of perspective though. Where you see the system not working, I do, sort of. And I do see a major difference between a Barack Obama and a Sarah Palin; night and day, pun intended. Americans didn't like what they saw in 2010 and made a drastic change. It happened in 1981, 1994, and 2008. I suspect they will fix their mistake in 2012; at least I hope they will. So, I offer that as a bit of an example for the idea that it can happen.

What needs to change, in our system at least, is the way campaigns are financed and run; somehow the massive influence of corporate and special interest money has to be mitigated. Right now that is going to be very hard because of who is sitting on the Supreme Court, but that will change in time. As you can tell, I am an optimist, lol. I will also go read your articles, I am sure they will make a good read.


Mr. Happy profile image

Mr. Happy 5 years ago from Toronto, Canada

Time solves everything indeed Mr. Esoteric.

I am curious though, do you think we are living in somewhat of extreme times? Or do you think we might be heading toward some sort of extreme times? (just in general terms, nothing specific)

I enjoyed the conversation - thank you.


My Esoteric profile image

My Esoteric 5 years ago from Keystone Heights, FL Author

Good question, Mr. Happy. Yes, I think we are definitely in some sort of extreme times. From my view of American history, which I am finally taking a good look at, this is probably the most devisive since the Adam's/Jefferson election (subject to revision). Whether we are on an up-slope or a plateau, only time will tell. But, I am pretty sure things aren't getting better yet. In Canada, on the other hand, things seem relatively calm, which is making it a pretty appealing place to move to, despite the cold, to get away from the mess and stress where I live. But, I guess I won't, writing and learnting about it is too much fun. I even haven't heard much about the Franco-English dust up y'all have lately. (I moved the South, so I am learning their language.) I have enjoyed this conversation as well.


mib56789 5 years ago

Yeah MY ESOTERIC. Networking and promoting. I get you where you're coming from. The late Ray Charles said he knew a lot of musicians that were way better than him. And yet ... they called him "The Genius". His people knew how to network and promote, I suppose. I'm like you (sort of). I don't even vote. I don't really talk (except on occasion I flip my lip making a comment on an article or something). I pray. That's my path to FREEDOM. GOD BLESS AMERICA.


Mr. Happy profile image

Mr. Happy 5 years ago from Toronto, Canada

"Even as extreme, to me anyway, as your views appear to be" ... "Yes, I think we are definitely in some sort of extreme times" - I am but a product of our times Mr. Esoteric. All the best to you Sir!


GuitarGear profile image

GuitarGear 3 years ago from Youngstown, Ohio

My Esoteric, Lately I've been disgusted and depressed at the thought that the Tea Party caucus is once again stalling on raising the debt ceiling. America is paying the price for the lack of diligence of the Democratic party when in 2010 they failed to ensure a Democratic majority in congress and let these idiots in. Boehner is a chameleon and will do anything to continue his position as house speaker. Cantor and McConnell, on the other hand, may have another more sinister agenda. It is my sincere hope that the Democratic party is pulling together all of it's resources to get behind the potential Democratic opponents of these Tea Party parasites in 2014. It's too bad we have to wait that long. It may already be too late if they balk on raising the debt ceiling. It's treasonous. They are hurting this country and unfortunately may be the cause of it's demise. The Tea Party is the domestic enemy that is potentially more dangerous than all of our combined foreign threats. Who would have thought that the most devastating war America would face would be on the floor of it's own House of Representatives.


My Esoteric profile image

My Esoteric 3 years ago from Keystone Heights, FL Author

Great thoughts, GuitarGear, thanks.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working