Wednesday, April 13, 2011

I agree with Obama?

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” he said. “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. … Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.”

Who am I quoting above?  President Barack Obama.  Yep, back in 2006 when George W. Bush was president...and he actually did vote against it.  It passed anyway, 52-48.  I find it strange to say that I completely agree with every word he said.

The thing that I find disturbing is the drastic change in his thoughts between 2006 and 2011.  He now says that he regrets his vote against raising the debt ceiling.  The White House has gone so far as to say that "the consequences of not raising the debt ceiling would be Armageddon-like in terms of the economy."

So what exactly is the debt ceiling?

It seems pretty's a cap set by Congress on the amount of debt the federal government can legally borrow.  We are currently $14.216 trillion in debt, which is only $81 billion shy of the cap.  The ceiling has been raised 74 times since 1962.  So raising it is hardly a new thing.  However, it's hardly  a good thing either!

The treasury is constantly borrowing money to fund operations and pay creditors.  In short, we consistently spend more than we bring in.

If the debt ceiling is not raised the options are: to cut spending or raise taxes by $738 billion dollars (just to be able to make it through the next quarter), or default on some of our debt obligations.

Would defaulting on our debt be bad for the entire world?  Oh yeah.  

So I get why they want to raise it.  However, there truly has to be a day of reckoning.  We simply must put an end to living beyond our collective means.  We need a responsible budget.  Budgeting the money we have and not spending any more than that.

In high school civics you probably learned (but may have forgotten) that Article 1 of the Constitution states that one of the responsibilities of Congress is to "appropriate funds" or make a budget.

It's April and we still don't have a budget.  It is quite a mystery why they didn't pass one when they had a Democratically controlled house, senate, and white house.  That would have been much easier and made a lot of sense...but I guess they were too busy shoving Obamacare down our throats to worry about trivial things like a budget.  Or maybe they just wanted to wait until the Republicans got some power so they could blame the stalemate on them.  We may never know, but it is inexcusable.

My family has a budget.  We are raising four children on one's pretty much a necessity to know where our money goes.  We have student loan debt, a mortgage and one car loan, and we are working to pay it down as quickly as possible.  So yes, I see that sometimes debt is a necessary evil.  We do not, however, have ANY credit card debt.  Racking up debt on credit cards would allow us to live beyond our means, but I am happy to report that we are smarter than that.  Don't we all wish congress was as smart as me? :)

No, our country has found that it is really fun to live beyond your means.  You can throw around money funding all kinds of entitlement programs and making everybody happy.  Then you see the chart below and realize that you have gotten yourself into some serious trouble.

In February, the Obama Administration posted the largest monthly deficit in US history.  It's pretty scary because there is no end in sight.  Just to put it in perspective: That single month's deficit is 4 times as large as the spending cuts proposed by house Republicans and more than 30 times the cuts offered by Senate Democrats.

Have no fear though.  President Obama has begun his reelection campaign and announced today his plan to save us all.  He is going to raise taxes on families making over $250,000 ($200,000 for individuals).  Well thank goodness!  And the rest of us thought we might need to cut some of the out of control spending!  

Yikes!  I think they should all be forced to take a Dave Ramsey Financial Peace class before they are sworn in.  We are going to have to take some serious steps to get out of this much debt, and it's going to hurt a little ("Beans and rice; rice and beans" for those Dave Ramsey disciples out there).  Bottom line though, it has to be done.  Simply raising the debt ceiling every time you approach it is unacceptable.