With the soon-to-be-departing his role as Treasury Secretary Timothy Geithner recently issuing a letter that the U.S. government will once again reach the debt ceiling sometime in mid-February or early March. This of course means another round of dram where politicians will put on a dog and pony show for several weeks arguing about yet another manufactured “crisis” of their own creation, before predictably settling on some sort of deal which maintains the status quo while ensuring that the real problems – rapidly expanding government spending, debt and future unfunded obligations – remain completely ignored.
We’ve argued that changing the party in power never changes policy and this certainly holds true when it comes to the debt ceiling debate. Republicans are opposed to raising it now while a Democrat is in office, while they had no problem with it being raised seven times during the Presidency of George W. Bush. Predictably, Democrats were also opposed to raising the debt ceiling during Bush’s presidency and completely support it now. The end result of this political wishy-washyness is that the debt ceiling is raised every single time. So no, the debt ceiling “showdown” between the Democrats and Republicans in Congress will be just another in the long line of boring, played out political dramas that those that just can’t help but follow these things will be
A far more interesting showdown on the subject of the debt ceiling can be found by contrasting the positions of Barack Obama and…Barack Obama!
Here is Senator and soon-to-be Presidential Candidate Barack Obama in 2006:
The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies… America has a debt problem and a failure of leadership. Americans deserve better.
Not so fast now! Here’s a rebuttal from President Barack Obama earlier today:
To even entertain the idea (of not raising the debt ceiling), it’s absurd.” Obama lays down a marker for GOP lawmakers on the debt limit…They will not collect a ransom in exchange for not crashing the American economy.
The fact that the President believes that not raising the debt ceiling is what will crash the economy shows complete ignorance of the real problems at hand. It is not lack of government spending that will cause the real crash sometime in our possibly quite near future. Rather it is the unending government spending that drains the productivity out of the private sector, all while creating an unsustainable government bubble that will inevitably and disastrously burst.
The futility of the debt ceiling debate is apparent, as it is inevitably raised every single time without fail. If politicians understood the real problems with the economy they would refuse to raise the debt ceiling, immediately and drastically slash government spending and taxes, allowing the private sector to breathe. Humans need to breathe to live, and so does the free market.
Unfortunately it appears that our Congressional overlords have other plans. And believe me, they ain’t pretty.