We’ve all known people who just couldn’t handle money. It slips right through their fingers. They’re not just living check-to-check, but check-to-scheme. They’re always in debt, and always in crisis. They constantly need another loan to cover the last. They play silly little tricks, like cashing a check with insufficient funds, gambling that it won’t bounce before they can make a deposit. It’s a way of life where, no matter how much money they have at any given time, they are predisposed toward broke.
It’s bad enough when a friend or family member is that way. Unfortunately, we’ve got a federal government just as ghetto.
The Huffington Post recently reported that “conservative strategists” are advising the GOP to soft-pedal resistance to raising the debt ceiling. They warn that the consequences of a protracted fight could be adverse.
If the markets get spooked, U.S. treasury bond yields will spike, driving up interest rates and increasing the price of borrowing money for everyone from the federal government to municipalities to consumers, [former Treasury and White House official in the Bush administration Tony] Fratto warned. The cascading effects on the economy would be severe and long-lasting.
You don’t understand. I have to take out another credit card. If I don’t, I won’t be able to make payments on the five I already have out. I won’t be able to pay my other bills either. I’ll have to sell my car, find a cheaper place to live, get another job…
Where are the grown-ups here? Where are the “strategists” pointing out that an economic contraction is inevitable? Where are the “strategists” saying it should cost more to borrow money when the investment carries greater risk?
I have a relative who went for years making the same argument in regard to her personal finances that these “strategists” are making in regard to the government’s. She learned nothing from her perpetual crisis. Today’s “emergency” was lived as if it were the first, and always played off as though it would be the last. She was always one loan away from getting back on track, but never did. Why? Because, like Washington, revenue wasn’t the real problem. She spent too much. A new loan didn’t change that. Winning the lottery wouldn’t have changed it. No amount of income, no amount of debt, no fiscal trickery she could concoct would ever compensate for her underlying inability to live within her means.
If you’ve dealt with a friend or relative like that, you’ve probably come to the conclusion that there is nothing you can do for them. There’s no point in helping them limp to the next check, because they’re not going to change the behavior which placed them in their predicament to begin with. That’s where the Tea Party is in relation to both parties in Washington. We don’t want Congress taking out another loan until they sell their car, cancel the cable, and find a cheaper place to rent. Otherwise, we’re just looking at the same “crisis” down the road, again and again and again.
Even Democrats are reluctant to write the Obama administration a blank check without some creditable plan to reduce the deficit. Of course, they have a different view regarding how. Pushed by their radical socialist base, they want to tax the rich. But that’s fundamentally no different than cashing a check today under the assumption it won’t bounce tomorrow. It works until it doesn’t. Then you’re screwed.
The only serious approach is drastic spending reductions, spearheaded by entitlement reform and the outright elimination of superfluous departments and functions. Like a spendaholic, drunkard, or glutton, we need a lifestyle change.