O-mama - Opinionated Moms

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Originally posted 6/9:  We all know about debt.  We know it’s bad, and we try to run our lives without incurring a lot of it.  Sometimes we do, but we try not to.  We try to only accrue debt for the big stuff - buying a house, a car, college tuition - that improves the quality of our lives, invests in our future and can be paid back over time.  If we rack up debt over the little stuff, the frivolous stuff we really don't need, it becomes overwhelming and too hard for us to pay for all the stuff we really can't afford.  So, to us MAMAs, it seems natural that the Federal Government should be run the same way, in theory. 

Just like us, the country does have a “max” on its credit called a debt ceiling.  The “ceiling” is a cap on the amount the federal government is able to legally borrow from the public (those of us who buy U.S. bonds), against its own trust funds (like Social Security and Medicare) and from other countries (like China).  The problem is the United States has maxed the proverbial credit card - our spending outpaces our income by $118 billion a month.  Oopsie - time to call a family meeting!

The good news is that the United States of America has money.  We do.  Our companies are flush and our people, on a per capita basis, are the most affluent in the world.  So, if we really wanted to come up with some revenue, we could (raise taxes, close some corporate loop holes, end subsidies, collect debts from other nations, exit the multiple military conflicts, cut discretionary spending, reform SS and medicare, so they are solvent and don't add a penny to the deficit). 

As a country, we really need to figure out what we need to spend money on, what we want to spend money on and what we can't afford to do right now.  We have some choices as a nation. 

We can raise our self-imposed credit limit - we’ve done it 72 times already since 1917.   (However, we’d like the caveat that it's time to get our fiscal house in order - a bunch of elected adults coming up with a fair and balanced solution for the long-term.) And, we could raise some revenue (taxes etc.) and cut spending.  

Or, we could default on our debt - meaning, we don’t pay our bills.  Whoops, if the government doesn't pay up, what does that mean to us - the American taxpayer?  That means the government has spent our money and is threatening to default on us. Yes, US - treasury bonds, medicare and social security are programs that the American people have already paid into with the promise of stability for our future.  Oh, and we default on our debts to other nations, too.  So, we'd be the deadbeat country that failed to pay up.

Let's remember as we talk about the deficit, we know we need to pay it down, but like our mortgage we don't need to pay it all off right now.  As long as we can afford to pay it down over time, and we have some smart financial planning for the future with some adjustments in our spending behavior, then we're good.  So, in the short-term, we need to make sure our monthly cash flow is o.k. and we need to keep growing our economy. Jobs. Jobs. Jobs.  

MOMism:  "Don't cut your nose off to spite your face."  We need to think big picture and realize what we are really talking about here.  All of the political posturing, finger pointing and excuses are old.  So, we just wish our politicians would knock it off!  Our government has frivolously spent our money on tax cuts, wars, bailouts, waste and more.  BOTH PARTIES are at fault, so they need to fix it.  Raise the ceiling…so that we don’t default…and buy some time to really get our fiscal house in order…we’re over it.  There are a lot of structural issues that need to change, figure them out and do it, but do not punish the American people in the process with your silly game of chicken.  America wants to get back to work.  We don't want to make it any harder than it already is for people to find a JOB.

How bad could it be?  Well, think about what happens when you default on your mortgage?  You lose your house. And, if you lose the roof over your head, it makes getting back on track that much harder. If we default on the full faith and credit of the USA and we damage our credit rating, it makes it that much harder to get out of the economic crisis we're in. Currently, the United States is a good credit risk…the best, because we have the strongest economy in the world - we are the richest nation in the world and we always pay, so we always can get loans at great rates. 

Think about the way businesses run...it's all based on credit...and US currency is the way the world does business.  So, when the US says IT can’t pay…everyone else in the world gets nervous.  The world financial markets are tied to the United States and the dollar.   Our economy tanks and the world markets do, too.  Bad.  Super bad.  The US economy is still recovering and we're barely keeping our head above water, why in the world would we cut our nose off now? What's your opinion, MAMA?