Debt Crisis Coming & Who Cares? : Citizens? Congress? The President?

The bottom line in the debt debate is who is the strongest morally? Who will 'stand and be counted' in favor of sustainable growth through common sense cuts to spending and taxation no matter the consequences to their political careers?

Also, how many of our citizens are willing to deal with cuts in entitlements? At what point does the average citizen believe they will be in mortal danger if we don't act now to save the social network of entitlements?

Is it when the dollar is no longer the currency of record and the stock market drops 5000 points and every one's saving accounts disappear? Or is it when the social security check that always came at the end of the month doesn't show up, only a letter in the mail saying the department of revenue is out of money?

Do you think, then, the people that are blind to the problems that we face today will suddenly see the error of their demands to not touch their entitlements, those that were completely unwilling to accept less now so they will have a future benefits? Even under Paul Ryan's proposal, those 55 and older will have no change in their benefits, and yet those that demand the most are blinded by fear of losing their near term benefits, who cares about tomorrow.

The fact remains, fix the entitlement programs now or down the road there will economic chaos beyond our wildest nightmares. What then do you think will be the agenda of the entitled.

Debt Ceiling Fight Club
Source: Veronique de Rugy, "Debt Ceiling Fight Club," Reason Magazine, October 2012.

September 27, 2012
The debt ceiling debate continues to provide ample fodder for the Obama campaign about the irresponsibility of Republicans and their role in the ratings downgrade for U.S. bonds. However, despite popular belief, Republican lawmakers are not at fault, says Veronique de Rugy, a senior research fellow at the Mercatus Center.

•Standard & Poor (S&P) threatened to downgrade the U.S. rating if it didn't reduce the debt by $4 trillion, agree to a credible plan within three months, and guarantee the promise of the newfound fiscal discipline.
•However, the Budget Control Act of 2011 raised the debt ceiling by $2.1 trillion.
•Furthermore, the debt reduction package only committed $900 billion in cuts and another $1.2 trillion in deficit reductions.
•Even if all the cuts were implemented, government spending would grow from $3.6 trillion in 2012 to $5.2 trillion in 2020 with a 10 percent increase in military spending.
•Additionally, the Budget Control Act did nothing to make Medicare, Medicaid, or Social Security sustainable.

The ratings downgrade came from Washington's unwillingness to come together to create a true package that included serious reductions and long-term sustainability. Lawmakers on both sides of the aisle were unwilling to make serious cuts to many of the entitlement programs.

Treasury Secretary Timothy Geithner argues that the long, drawn out debates need to be avoided in the future to prevent pain and suffering to the economy. However, the impacts that were thought to be associated with the debt ceiling debate did not materialize.

•Interest rates continued to stay low.
•This is proof that investors never feared the government would default on the debt.

However, it is important to realize the haste with which the government needs to act in response to mounting debt. Tough spending cuts need to be made. Many people see the country's low interest rate as a sign that the economy is doing well. However, the Federal Reserve is keeping those rates low to boost the economy. Moreover, other countries are in worse fiscal shape than the United States, which makes the economy look better than it is.