It appears that Treasury Secretary Timothy Geithner has provided the excuse that many in Congress may have been waiting for. He has declared the United States to be insolvent; therefore, we have no choice but to raise the debt ceiling.
I am not sure how Mr. Geithner defines insolvency, but here is a definition from Dictionary.com:
1. not solvent; unable to satisfy creditors or discharge liabilities, either because liabilities exceed assets or because of inability to pay debts as they mature.
Well, it is true that our liabilities are through the roof; no doubt about that. However, his statement seems to indicate that the only course of action is to raise the debt ceiling. It seems to me that this provides a very nice excuse for our representatives from both sides of the aisle to vote for increasing the debt ceiling, citing this emergency. Reminds one of TARP, does it not?
Now let’s take a look at how this would work in your little world. If you lost your job, you would not have any income with which to pay off debts. Do banks usually raise your credit line in such a circumstance? Does the Federal Reserve send you a pile of freshly printed money? No way. You would be out of luck and your credit shot for years to come.
What if you still had your job, but you had run up a large credit card balance that had become impossible to pay on your current income and budget? Would you be more likely to borrow and spend even more, or would you be more likely to cut out anything from your budget that you could live without, so you could make your payments? Well, Dave Ramsey might tell us that too many would still choose the first, but I think that’s what got us all here in the first place.
What are some other things we’d never do at home? How about loaning money to relatives when we are broke ourselves? Isn’t that what our government is doing with all the money going overseas, into the United Nations and elsewhere? It seems immoral to loan money we don’t have and then stick taxpayers with the bill. Some might even call it redistributive.