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Here’s How to Solve the Debt Ceiling Problem


I don’t know about you, but I’m sick of the debt ceiling debate. Lawmakers wage war over it despite already knowing what the outcome must be.

The first problem in the tired old debt ceiling debate is the American people. If everyone faced an impromptu civics exam, too few would pass these days. Too few of us understand how our own government works. The debt ceiling serves as a perfect example.

The second problem is that too many politicians depend on our collective ignorance when it comes to the concept. It allows them to grandstand. It allows them to cause drama and fight their adversaries despite their already knowing the ceiling will have to be raised. Yes, they may gain something else out of it, but they threaten the nation’s credibility and the livelihood of those who rely on the government in the process.

The third problem is that there’s an obvious way to stop this ridiculous infighting. It’s just that the same politicians who enjoy waging this kind of battle aren’t willing — indeed, they haven’t been willing so far — to implement it.

The way I score it, it’s Politicians – 2, American People -1, in this war. Yet while the politicians lose, the American people end up being the victims of the debate.

Think about the credit cards you carry

Credit cards have this pesky little thing called a credit limit. It’s wise — believe me, it’s very wise — to never reach your credit limit. In fact, you should keep any balance you carry over well below your credit limit. Charging right up to the line can hurt your credit score, which can cause you to lose out on lower interest rates.

But your credit limit, whatever it is, gives you a boundary for spending.

Let’s say you have a credit card with a $2,000 credit limit. By some standards, that’s a small credit limit. But some credit cards offer lower credit limits than others. Go with me on this. Now, let’s assume your car breaks down and you have to have it repaired. Your mechanic says it will cost you $2,500 to get back on the road.

If you don’t have at least $500 in savings, you’re in trouble. Your credit card is only good for $2,000, assuming you don’t already have a balance. Without a separate $500, you won’t be able to pay that bill.

Let’s say that you have overdraft protection for your checking account, and that in your checking account, you have $250. But the overdraft protection on your account is only good to cover $200. You’re still in a bad spot: If you write a check for $500 to cover what your credit card won’t, you’re still going to bounce a check because of a $50 shortfall.

What are your options? Simple: You can call your credit card company, explain the situation, and ask for a credit limit increase. Likewise, you can visit your bank, explain the situation, and ask for an overdraft protection increase.

Either may say yes. In fact, it’s possible either one might agree to enough of an increase to solve the crisis. Both may say yes and give you a little breathing room.

But both could say no, leaving you in a lurch.

Your credit limit, then, can dictate how much you can spend.

Debt ceiling is only a little like a credit limit

If the debt ceiling was to Washington politicians what a credit limit was to the rest of us, things might be easier. But it doesn’t work that way in the nation’s capital.

The debt ceiling is like a credit limit in that it sets the maximum upper limit the government can borrow to pay its bills.

But there’s a big difference here.

The way the process works in Washington doesn’t exactly compare to the scenario of the hapless consumer facing a car bill that’s too high. You see, when lawmakers pass a budget, they already commit to spending the money they’re going to spend. They don’t (apparently) consult their credit limit first. They fight back and forth over the budget. Then it gets passed.

And then the talk of the debt limit comes up. That’s because someone realizes that with the current debt ceiling, the government won’t be able to borrow enough to pay the bills it has already committed itself to.

If I were to adapt the debt ceiling scenario to the driver with the big repair bill, it would be like they already wrote the check to cover the cost of the repairs and put it in the mail. Once they mail it, then they desperately contact their bank and beg for that increase. Or they pay by credit card hoping the card won’t get declined and then beg for a credit limit boost to cover their overage.

We consumers don’t get to do that. We can be charged with fraud if we knowingly write a check we can’t cover.

Our politicians can essentially pay bills with money we don’t have and can’t borrow until the debt ceiling is raised…even when they don’t even know if the debt ceiling will be raised.

How can they assume? Simple…

Our leaders assume that sooner or later, they will reach whatever compromise it takes to raise the debt ceiling. That way, the nation will be able to pay its bills and the side that attempts to hold the nation’s credibility hostage will get something they want.

They assume that this will happen without the government actually having to default. It would be bad if that happened, these fools reason, so no matter how much grandstanding they muster, they assume that it won’t actually reach that point.

But that assumption is little comfort to people who would be directly affected if the debt ceiling didn’t get raised.

If the country couldn’t sufficiently borrow to pay its bills, we could see at least a partial shutdown of government operations. That affects government employees who find themselves suddenly furloughed because money for their wages is on hold. Essential programs may temporarily cease. Those who depend on entitlement programs like Social Security may also suffer because their checks may be delayed. For some, that means they won’t have money for food or medicine.

Financial markets could be driven into volatility from a government default. That means an economic slowdown or even a recession could result. That hits all of us in the pocketbook.

Unfortunately, our politicians are too interested in fighting each other and not interested enough in compromise to protect the nation’s credit and the economy.

The solution to the debt ceiling problem would be easy…if only…

Politicians could avoid all of this with a few simple changes. For one, whenever they approve a new budget or new spending plan, they would need to be required to make any necessary debt ceiling adjustments at that time. Allowing this to be a multi-step process where they approve spending on one phase then arguing over whether to raise the ceiling later.

If they’re going to insist on playing this little football game, there needs to be consequences for them. Any politician who votes against raising the debt ceiling or who threatens to force the nation to not be able to pay the bills it already has authorized should be barred from re-election. They should also lose their pension and benefits.

Maybe placing their financial health at risk might be enough to make them take their responsibilities more seriously.

And if they’re really interested in cutting spending, tying individual spending plans to automatic debt ceiling increases to cover them might motivate them to vote more carefully to begin with.

Of course, there’s a problem. The people who’d have to vote for these rules would be the ones the rules would punish. So we can safely assume that won’t happen.

No politician will gladly give up an ounce of power. That’s how we get into these ridiculous squabbles again and again.

Maybe, at some point, we’ll elect enough politicians with backbones to get change accomplished.

There’s always hoping, at least.

the authorPatrick
Patrick is a Christian with more than 30 years experience in professional writing, producing and marketing. His professional background also includes social media, reporting for broadcast television and the web, directing, videography and photography. He enjoys getting to know people over coffee and spending time with his dog.