I’m coming around to the idea the debt ceiling shouldn’t be raised, at least not until there is a solid plan in place to reduce the debt rather than constantly increase it until the debt holders (read China) effectively own the county. I like China; I just don’t want to pay them rent.
The debt ceiling debate seems kind of nuts to me because we are going around in a panic largely because those running government didn’t get their butts in gear in time and simply assumed that they’d get another blank check. That mentality alone suggests there needs to be some big changes. Let’s explore this a bit.
Bankruptcy
We have a concept called bankruptcy for when an entity can’t pay its debts with income now or in the reasonable future, and we currently can’t. This process forces fiscal responsibility in exchange for concessions from lenders who probably shouldn’t have trusted us to behave responsibly in the first place. We fit that model, there is no plan on the table to pay off the debt, both parties have submitted plans that only deal with about a third of the debt increase and are inadequate according to the S&P.
At the Core of the Problem
The actual core of this problem isn’t that folks are saying no to the idea of borrowing more money, it is that we can’t seem to function within our income. We were pretty much able to up through 1980 but then the wheels came off the wagon and now we have a massive mess. Historically we just borrowed more money passing the problem on but how the heck are future generations expected to pay this off? If we don’t deal with our inability to behave fiscally responsible at some point we become Great Briton or France or Ex-Superpowers and are in danger of becoming Greece who actually has less debt per person than we do at the moment.
Sell Washington to China
Effectively we need to come up with a lot of cash in order to buy down our debt. That’s the reality. If this were a company we’d sell off a division in order to raise the cash and reduce the debt. Why don’t we sell China Washington? It has a lot of really nice museums, it isn’t a State so we wouldn’t have to change the flag and the only thing we’d demand is that the politicians would be shipped to China and denied a Visa to return. We could move the capital to New York, where Wall Street is, to California which has nice weather and a range of political views, or Hawaii which would place the new politicians as far away from the country as possible. More seriously we could sell Alaska, China wants the Oil Reserves, and it has a low population which would be inexpensive to move.
Crazy right? But this is the kind of thing we would have to consider if we were a company in the same mess. If we fired Washington and brought in a turnaround CEO he, or she, would start by firing most of the existing government and then look for things to sell to raise capital and pay down the debt. Then put in place programs that assured a profit. Some countries actually pay their citizens an annuity, or did. I kind of like that idea.
Fiscal Responsibility: We Need a Turn Around Manager
In the end we don’t have to raise the debt ceiling, we don’t. We do have to come up with a plan, eventually, to return the country to fiscal responsibility. That we can’t avoid we can only postpone. We currently have 2.5 wars we can’t afford and the most expensive healthcare (which is also one of the worst) in the world. We could likely start by dramatically changing defense spending so that it actually was focused on defense and removing the inefficiencies from our medical programs. But in the end the only real fix is to put in place a plan to assure that government can no longer spend what it doesn’t have only to come back and ask for more money until the country fails under a wave of debt. If the US government it wants to preserve its “honor” it must find a way to return to living within its means.
In short we need a turn-around specialist and what we have is the Three Stooges both houses and the executive branch.
