So Who’s (De)Fault is it?

In less than a week, we are told, all hell will break loose, if Congress doesn’t act to raise the debt ceiling. The country’s credit rating will fall, Social Security checks will not be mailed, the national parks will close, vital services will stop or be drastically cut, and the liberty bell will break totally in too. Others tell us that, if we raise the debt ceiling, we will be borrowing more money from China, our grandchildren will have to earn to speak Chinese in order to get the only jobs that will be available – working in American sweatshops to make goods to sell a newly-affluent China.

At this time, Congress is deadlocked. The more conservative members Republican Party will not agree to an increase in the debt ceiling under any circumstances. Others take the slightly more reasonable stance that, yes, they will agree to a temporary increase in the debt limit, but only with massive cuts to spending on Medicare and other entitlement programs. Still others have realized that we need to raise the ceiling, but need enhance revenues and to make different spending cuts.

I keep hearing the country compared to a family or a small business. When a family finds that it has overspent – say for an expensive vacation, to buy a new car, to move to a bigger house, or to invade Iraq – it doesn’t have to option to keep borrowing and borrowing money that it can’t hope to pay back. It has to cut back. Too bad for the sick grandmother who really needs that operation and too bad for the kids who would really like to go to college, and they’ll just have to get a bigger bucket to catch the rainwater that comes in through that hole in the roof when it rains.

Except that this is now how a modern, resourceful, intelligent family solves the problems it finds threatening it when it wakes up from its spending binge. They’ll try to refinance at a more favorable interest rate. They’ll make some cuts – even unpleasant cuts – on spending for family expenses (more meals at home, fewer new clothes, less expensive Christmas presents, etc.) and put more of their income into paying off the debt. A business will do the same thing – fewer employee perks, try to cut back on the energy use, one-ply tissue in the restrooms, and so on. All of these things might help somewhat, and they might bring the family members closer together and might teach the business owners how to work smarter.

However, there is another thing that the family and the business might be able to do to help pay off the debt without making cuts so deep.

The business or the family can work to increase its income.

That is at least part of the solution for many families. A spouse who does not work outside the home gets a paying job. An employed spouse gets a second part-time job.
The kids make a little spending money after school and on weekends. The business starts selling previously un-thought-of products. All of these are ways that inventive companies and families increase their revenues.

Now, the U S Government can’t to out and get a paper route. But it can increase revenues. Governments increase revenues in one way – by increasing taxes. It’s that simple.

The Federal Income Tax on the wealthiest Americans is lower than it’s been in a generation. Bush gave the rich of this country a huge tax cut at the same time he increased spending. We still have Bush’s wars and we still have the Bush tax cuts. We need to end both.

I’ve heard it said that rich companies and CEOs are job creators, that taxing them more will end that job creation. Well, where are those jobs? And with Fortune-500 CEOs making 300 times the salaries of their workers, and with oil company stocks paying huge dividends, while unemployment still hovers around the double-digit mark, I fail to see that job-creation is a fundamental goal of many of our Nation’s large corporations and billionaires.

If this mess is not cleaned up soon, and if we are all forced to pay higher interest rates for all kinds of loans, the net result will be as if a tax has been imposed on everybody, including – no, especially – those who are the most vulnerable.

Please remember that Clinton left Bush with a budget surplus. Bush’s tax cues and misguided wars made that vanish down a drain of crippling debt, without so much as a gurgle. Ending the wars will take some time, but the Bush tax welfare for the rich could be eliminated much more quickly.

Will it happen, probably not – at least not until things get much worse for the vanishing middle class the poor, and that is very sad.

However, what does need to happen now is Congress needs to raise that limit and get to work on ways to make further increases less frequent.