Debt Ceiling 2013: Stop Talking About the GOP — They're Not the Problem

The central point in the debate about the debt ceiling is misplaced, focusing too much on the Republicans rather than the actual national debt.

The problem isn't the Republicans. The problem is debt, and it derives from past policies of both parties. The argument that we can avoid the consequences of the past if we repeat its mistakes is the manifestation of Will Rogers axiom: "If stupidity got us into this mess, then why can't it get us out?" 


Debt trades more consumption today for less consumption later, which in reality is nothing more than borrowing prosperity from the future. Excessive debt is an economic placebo which serves the political interest of fostering voter complacency out of a false sense of prosperity. This isn't a good deal for millennials.

With debt, we buy today what we would otherwise postpone. You may buy a car today because of low interest rates, but that car is a car that you don't buy in the near future. Buying a refrigerator today on "three years same as cash" removes a sale from 2016. 

These transactions are great for 2013. Our economy seems robust as sales increase. Our economy benefits as the people who make cars and refrigerators spend money today that they would have earned in 2016. These transactions are wonderful for politicians because politicians care about 2013 more than they worry about 2016.

The nation is trying to emerge from the consequences of this behavior. From the mid-1990s to 2007, the nation built houses and mortgages. Americans bought houses sooner.  The sub-prime loan gave Americans who never would have bought a home otherwise the opportunity to do so. With every passing year, the nation needed to progressively pull housing demand from the future to replace what had been pulled into the past. When we arrived at 2008, we had no future demand to pull forward, and no way to pay for all of the debt that went into creating a false economy. Is this outcome one that you want to repeat on a larger scale?

The center of the debate should be the debt, and how we mitigate the consequences of our past mistakes.

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Brenton Smith

Professionally, I manage credit risk in bank deriviatives. Politically I write commentary for www.FixSSNow.Org on the issue of Social Security reform.

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