The debt ceiling debate has continued on with no sign of compromise across party lines, as the Democrats and most leading economists have argued vehemently for a debt ceiling increase, with Republicans clamoring for the ceiling to remain as is. Time is running out, as most economists–particularly Federal Reserve Chairman Ben Bernanke– have noted that if the ceiling isn’t upped by August 2nd, there could be a number of serious repercussions for the nation’s economy, including but not limited to the depreciation of the dollar and defaulting on loans, which could in turn lead to talks of a potential downgrade of the US’s credit rating.
As we approach the dreaded deadline, it has become increasingly clear that whatever we do will not be a perfect solution and will certainly not please everybody. If the economy follows the GOP directives, the aforementioned could very well happen, which would be catastrophic for an ailing economy that is attempting to retain its position as the premier economic force in the world. However, the Obama administration’s plan to increase the debt ceiling will be unappealing to many because, naturally, it will lead to increased spending that seems like it will only bury the economic further and further, putting the nation in the red even more than it already is.The situation is clearly not simple, and while the main facets of the conundrum seem to be what to do with spending and whether to increase taxes or leave them as is (or, to increase taxes on the wealthy). According to Sen. John McCain, Americans “don’t want compromise” on the issue of potential tax hikes, and it would be political suicide for the Obama administration to raise taxes for anyone–wealthy or middle class–with the 2012 election not far away.
It is not even worth detailing the various positions and proposals of several members of Congress because the proceeding have thus far not even approached a semblance of compromise or action. As the August 2nd deadline–which sits less than a month away–draws near, it is clear that we will either continue to see the worst of our politicians or their best. The former would not be a departure from the status quo; partisan bickering has become the norm, making it difficult for anything meaningful to get accomplished. If it’s the latter, it will mean that a compromise of some sort will have been reached, which, given the way things have gone, will be a small miracle. Congress and the President (and others of similar policy preferences) are talking past each other day after day, getting no closer to a solution or even a temporary fix. The Mayor of Los Angeles, Antonio Villaraigosa, put it succinctly:
“Democrats won’t address entitlements, Medicare and Social Security, and Republicans don’t want to talk about revenues or defense spending. And the fact is we’ve got to do all of that,” he said.
It’s gut check time for America’s policy makers. It’s time to set aside the political rhetoric and the bickering and the partisan agendas for what is best for America because we are at the tipping point. This could be one of our finest hours as a nation, but it could also be business as usual. As of right now, it looks like we’re set to be served another serving of the latter.
Contains information from CNN.