The Debt Ceiling & The Definition of Insanity – Top 3 Takeaways – May 10th, 2023
- The definition of insanity. Yes, insanity is akin to doing the same thing over and over again expecting a different result. Yes, I think it’s entirely justified to suggest that our federal government, by way of spending habits, has been insane in the membrane for quite some time now. The debt ceiling debate is nothing new. It’s a dance that’s seemingly held every couple of years, with slightly different arguments, but ending with very similar results. But yesterday as House Speaker Kevin McCarthy and President Joe Biden met to discuss the current impasse over what to do about the debt ceiling, or the legislative limit on the amount of national debt that can be incurred by the US Treasury, it was different. And it wasn’t just different because the principals involved are different. It’s different because while you may not have a firm understanding of what the debt ceiling even is, and perhaps previously hadn’t thought it really meant anything to you, you’ve been paying for it. And by “it” I mean the previous decisions to continue to raise the debt ceiling to allow the federal government to continue to live well beyond its means. The throwing of your future tax money out the window like it’s a Mardi Gras parade. Treasury Secretary Janet Yellen now says that in less than a month the federal government will reach the debt ceiling. And while we’ve been there before and have done that – including 21 partial government shutdowns previously – what none of them had was...
- Inflation as high as what we’ve been paying for two years previously. Regardless of one’s understanding of how our federal bureaucracy works, we all intellectually know that there’s only so much debt we can take on before it doesn’t work anymore. In our personal lives we know it’s possible to continue to rack up debt as long as we can meet all of our minimum monthly obligations. The moment we can’t the game is over. But now imagine you’ve maxed out all of your credit cards, you can’t afford to make the minimum monthly payments, and your proposed solution to your creditors is that they give you yet another credit card. In fact, you're so emphatic about it you say that the only responsible thing for your creditors to do is to extend even more credit to you. That’s because you’ve got to pay your bills after all, and the only way for you to be able to pay your bills is by taking on even more debt to do it. Now how do you think that conversation would go? I mean that line of thinking is the epitome of insanity, right? Which is exactly what every creditor would tell you in so many words if you ever attempted that conversation. Now let’s turn this around. Let’s say you’re the creditor. What would you say to someone who would come to you and say something like that? Well, that’s exactly what you should be saying to President Biden and Congressional Democrats because that’s exactly what they’re asking you to do, and you are the creditor. Biden and co. have said the only responsible thing to do is to raise the debt ceiling unconditionally so this country can continue to “pay our bills”. What a load of poo that is.
- By raising the debt ceiling we’re not paying our bills. We’re creating more of them. And these days we’re creating more of them at ever higher interest rates. Just as any money you borrow now comes at much higher interest rates, that’s the case with our Treasury Department as they debt spend too. The Treasury must pay the higher interest rates as well which makes the debt, we’ve already accumulated even less affordable, creating a vicious cycle which feeds on itself. So, here’s where this story all ties together and makes the request to unconditionally raise the debt ceiling, a truly insane one. The primary reason we’ve had two consecutive years of 40-year high inflation is due to artificial demand generated by record government debt spending which was exacerbated by already strained supplies. Some of which was self-inflicted a la President Biden’s week one decision to kill the Keystone XL Pipeline and ban the harvesting of energy on federal land while increasing regulations on energy companies. In any event, starting with the so-called American Rescue Plan, in March of 2021, inflation took off like wildfire and we’ve been paying more everyday since for the free candy and free puppies and free Biden bucks and free Obama phones, that have never once been free. They come with the actual cost of the product, service, puppy or cash as the case happens to be and with ever higher interest. And so here we are being told that the only way things get better is if we continue to do exactly the same things that got us here. Sound insane to you? It is. And that’s what the left’s position on the debt ceiling has been reduced to. Absolute insanity. Now, here’s reality for a moment. If the federal government spends less money than it has been going forward, the value of the dollar in your pocket will be worth more, and consistent with that, the rate of inflation will decrease. And in so doing it would make it far more affordable for you and for the federal government to afford to pay the bills. The national coverage of the debt ceiling has been absurd and any effort to raise it without meaningfully reducing the rate of spending going forward is absurd. And again, this isn’t some opaque political argument in Washington D.C. that doesn’t really impact your daily life. It already has impacted you greatly and it does daily. The United States of America has reached the point where we’ve taken on so much debt, we’re having to literally pay higher prices to account for it. It’s time for the insanity to stop.