The Debt Ceiling And Possible Government Shutdown – What You Need To Know

by Donald Hanson • April 16, 2011 • Newsy JerseyComments (1)1740

Last week, the United States Government temporarily avoided a shutdown.

You can find a useful list of what government agencies/services will close and which ones will remain open here:

http://abcnews.go.com/Politics/government-shutdown-agencies-stay-open-close/story?id=13309873

But the information that is even more important is why this is happening and the future of the Government’s finances.

The reason for the near-shutdown was a fight over reducing spending and dealing with the National Debt, which right now is 14 times what it was 30 years ago. The Federal Government does not have to balance their budget, so they can run with debt. But there is a Debt Ceiling. This is the limit imposed on how much they can borrow. This would mean something, but every time they get close to it, they simply vote to raise it, and they have raised it 74 times since 1962. So really there is no Debt Ceiling at all. The Government operates on infinite borrowing. The problem with the government being able to run in debt is that it allows for all kinds of fraud, corruption, beaurocracy, inefficiencies, general stupidity and other wasting of tax-payer dollars.  If the Government had to balance the budget every year, when the money is simply not there to pay for basic tax payer services, the people in charge would very quickly start looking to see where the money went. If everyone is stealing from the cookie jar, then the money would be gone and the system would stop. They would then have to figure out how to fix those problems pretty damn fast. But when the cookie jar is bottomless, then all of the problems continue.

Think about it this way : Let’s say that you have a Credit Card with a limit of $5,000. You run the card up to it’s limit and you are paying the minimum balance. But you want to go out and buy more stuff. So you give them a call and ask for your limit to be raised to $10,000. They say yes and then you go out and run the card up to the new limit. Now a pattern starts, you simply call up the Credit Card company every time you need more money and have your limit raised. After a few years, your limit is $1 million dollars. Well why not just quit your job and do this until you die. Just get your credit limit raised into the Billions. Sounds like a good idea to me. Why wouldn’t that work in real life?

Well, obviously it wouldn’t work because the Credit Card company would not believe that you could ever pay that kind of money back. They would cut you off long before you got anywhere near a million dollars. But this is how the Government operates. They have an infinite credit card.  Most people think debt is just a number going up and it can just get bigger and bigger but that is not the case. The money has to be borrowed from somewhere, in the U.S. Governments case mostly other countries right now. The only reason they keep lending is that they trust that we can pay it back. As soon as they stop believing in our ability to pay it back, they will stop lending and then we will not have money to pay for our services.

Just like if you run out of money and stop paying your bills, you will be evicted from your apartment or house, anything you are still paying for will be repossessed, and you will wind up on the street or possibly in jail. Well the Government is currently borrowing over $2 million dollars per minute. Just imagine if that gets cut off abruptly. There will no longer be nearly enough money to pay for Policeman, Teachers, the Postal Service and any other services you can think of provided to us by the Government. So what choices will our leaders have? Well on one hand, they could print up a lot of money out of thin air, resulting in hyper-inflation destroying the value of the dollar and crippling the economy by making everything you buy way more expensive. On the other, they could raise taxes tremendously trying to bring in the money, but of course that would destroy the economy as well. And does anyone remember the phrase “Taxation without Representation”. That is about where we will be at.

The funny thing is that Politicians’ job is to manage tax-payer dollars to provide us with services and pass and enforce laws that we want. That’s it. That is all they do, and they are all failing miserably. They shouldn’t even be able to collect a salary if they can’t make the system work. At any rate, the deficit has to be paid off as quickly as possible to avoid some serious consequences. Republicans and Democrats have not done anything to fix this problem. They have both contributed tremendously to creating this situation and have no incentive to fix it. Politicians don’t have to deal with the consequences of the their own actions. They get paid well since they are in control of their own salary and raises, get free health care and either don’t understand or just don’t care what everyone else is going through.

Any sensible person will come to the conclusion that only outsider politicians will actually come in and do something about this. They say hindsight is 20/20 and recently, my father had me looking online for video clips of the 1992 Presidential Debate. I was watching the first part of the 3-way debate and it is shocking how the problems mentioned are the same as the problems that we have now, only now they are much, much worse. Watching it now, it is clear that Ross Perot was the only person on stage making any sense at all and that he really wanted to go in and fix things. And Bush Sr. and Clinton are a complete joke to watch, simply spouting BS and pandering to the audience in every way possible. The National Debt was one of the key issues. Of course then it was $4 trillion and now it is about to pass the current $14.3 trillion Debt Ceiling. Take a look at part 1, and you can find the rest of the parts on youtube if you want to view them.

 

 

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One Response to The Debt Ceiling And Possible Government Shutdown – What You Need To Know

  1. […] decide on one, we could default on our debt. A couple of years ago I wrote an article on what you need to know about the United States debt ceiling and possible shutdown. Now, its back […]

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