Most people are taught early on that they will not always get what they want in life. It’s a lesson gained through personal experience, taught in schools, preached in churches and even the title of one of my favorite songs by the Rolling Stones,” You Can’t Always Get What You Want.”
Based on the recent debt ceiling talks in Washington, however, it seems likely that most of our political leaders either slept that day when it was taught in class, skipped out on that Sunday School lesson, or just aren’t big Mick Jagger fans.
While most of our representatives in D.C. are obviously not good at compromises and hammering out details, they certainly are good at campaign promises and gimmicks. With all the rhetoric coming out of Washington, it’s hard to know where the truth ends and where the potential campaign slogans begin.
So what is the debt ceiling and why are the president and Congress so far apart from striking a deal? The debt ceiling is a cap set by Congress that limits the amount of debt the government can accumulate. The ceiling is set at $14.294 trillion, a mark the U.S. eclipsed back on May 16. If we do not raise the limit, the U.S. essentially defaults on its loans. Many people have described it as a credit card holder who can’t make the monthly payments. It’s obvious that if you can’t make the payments on your bills, it’s never good news.
More Republicans than Democrats have come out in support of not raising the limit. They have painted the argument as a way to curb spending.
So how did we get to the point of a $14 trillion debt? Was it by out of control spending? Well, yes and no.
During the latter years of President Clinton’s time in office, the country actually made more money than it spent. Everyday folks had more money in their wallets and the economy was booming. This prosperity was helped by investments in the growing technology/“dot com” industry and a Clinton compromise with the Republican-controlled Congress to curb spending.
As George W. Bush was entering the White House, however, the economy was starting to dwindle. Following the advice of his Republican advisors, the president and Congress passed a massive tax cut plan aimed at strengthening the economy. The economy under Bush, however, never reached the strength of the Clinton years. Unforeseen events, like the 9/11 terrorist attacks and the subsequent war on terror, cost the country a substantial amount of money.
Unfortunately, due to lack of revenue from those tax cuts, Bush had to borrow the money from bond holders to pay for the costs of the wars and to pay for other federal programs. Instead of paying for federal projects and the wars with our own tax money, we used borrowed money, which added to the debt problems now being quarreled about in Washington. Our debt of course cannot be pinned on one single president; they all made mistakes and should be held accountable for their spending decisions.
As a candidate in the 2008 election, Barack Obama promised to bring down the debt. While he faced an uphill battle to accomplish that goal, the president continued to heavily spend and has been characterized as having a lack of fiscal responsibility. His spending projects like “Obamacare” and his extension of the Bush tax cuts did nothing to curb the national debt in the near future.
Consequently, the president and Congress are now faced with potentially cataclysmic issues that should have been dealt with a long time ago. The bi-partisan Bowles-Simpson debt commission, made up of Erskine Bowles, former chief of staff for President Clinton, and former Republican U.S. Senator Alan Simpson, issued their recommendation on how to handle the debt almost a year ago.
What did they and many other financial experts recommend? A compromise of sharp spending cuts and moderate tax increases. What Americans are now witnessing is a pathetic game of chicken around those two proposals.
Most Republicans won’t support the Democratic proposal to close tax loopholes for corporate-jet owners, hedge-fund managers and oil companies. Limiting those tax breaks would bring much needed revenue without burdening the pocket books of the average American.
Most Democrats won’t budge on a Republican plan to reform entitlement spending for programs like Medicare, Medicaid, and Social Security. At current levels, the programs will continue to contribute to the crippling of the economy as more Baby Boomers hit retirement age.
House Speaker John Boehner at one point seemed close to a deal with the president on a long-term compromise that would have reduced the debt by $4 trillion over the next 10 years. Although such plans are fairly suspect since we don’t know who will be in Congress in 10 years or who will be president, at least it’s a compromise that shows that our leaders are borderline adults.
House Majority Leader Eric Cantor, however, has apparently taken over the talks for the Republicans and hopes to accomplish the goals of the Tea Party. Those goals, however, are not in line with the recommendations of most economists. On the other side, House Minority Leader Nancy Pelosi has been vocal about her adamant opposition towards adjusting those social programs.
Both sides are undoubtedly concerned with the election chances of their respective parties. Democrats don’t want to lose any more seats in Congress than they did during the 2010 mid-term elections and Republicans want to add even more to their ranks in Washington in 2012. To achieve their goals, Democrats unquestionably feel they have to hold on to the entitlement programs that have defined their party. Social Security was established by Democrat Franklin Roosevelt in 1935 and Medicare and Medicaid were set up by Democrat Lyndon Johnson as part of his “Great Society” reforms in 1965. Republicans have defined themselves as the party of reduced spending and no new taxes. For most Republicans, to increase taxes is considered tantamount to death at the ballot box.
The deadline set by the president and the Treasury Department for a decision is Aug. 2. After all is said and done, it seems likely that the country will increase the debt limit. We’ve actually raised the ceiling 74 times since 1962, including 10 times in the last 10 years. If a deal is accomplished, perhaps our leaders in Washington will learn a little more about one of life’s great lessons. Or at least try to remember the words to that classic song by the Rolling Stones, “you can’t always get what you want, but if you try sometimes, you might find, you get what you need.”