The Smashed Ceiling
May 26th, 2011Today, the United States has crashed through the self-imposed debt ceiling, and according to Treasury Secretary Timothy Geithner, the United states could risk going into default on August 2nd if the debt ceiling isn’t raised by then. Until that day comes, Geithner announced that he will be using employee retirement funds to stave off default.
This move reflects the ongoing problem the government has, where they have no sense of advanced planning and spend what they want. In nearly every other country, the government takes stock of how much revenue they have, how much they need to spend that fiscal year, and borrow accordingly. Not in the USA. Here in America, home to the world’s most reliable currency and trustworthy bonds (for now), the government plays it by ear, and borrows constantly. This would normally be alleviated by setting a responsible budget that Congress can agree to follow, but its been over two years since a budget was sent to the White House for the President to sign. This kind of fiscal management is ruinous, and is the reason why the country is staring down the prospect of raising the debt ceiling by as much as $738B to cover the rest of the fiscal year, according to the Congressional Research Office.
Unfortunately, our nation’s debt will continue to go up as long as we run a deficit, and even the most ardent fiscal hawks won’t cut that much money, even though there is more than that much in government waste. The debt ceiling is going to be raised, we already know that, but doing so without addressing the need to cut spending and shrink the size of government will mean we are going to revisit this problem in the future, and have the same arguments. The goal should be to balance the budget as quickly as possible, only then will we see any relief from our spending binge.
