Sunday, October 13, 2013

My Sunday Feeling

Unless the House of Representatives comes to its senses, the Government of the United States, the Greatest Nation on Earth, the Leader of what is left of what passes for the Free World, the Planet's police force-you get my drift-will have been out of business for 2 whole weeks.

The world must be looking on in amazement.  

It's not much more complicated than this.  A handful of Republican Members of the House are rolling their Speaker who doesn't have the balls to call to the floor a Continuing Resolution to fund the Government that doesn't have a lot of other crap attached to it.  Earlier on it was defunding the Affordable Care Act.  Never mind that it was legally passed into law.  Never mind that the Republicans ran against it in the Presidential election and lost. Never mind that the Supreme Court of the United States ruled that it is Constitutional.  And never mind that millions of people are signing up for insurance.  Or they are when the websites aren't crashing.

They don't like it and so they were willing to hold the Government hostage.  Why?  Because it's "socialized medicine."  Because it will "kill jobs."  And because-get this-it requires employer provided health care plans to offer coverage for birth control.

If you will look at your calendar you will see that we are well into the year 2013.  Not 1913.  You would think that this issue would have been resolved by now.  

Anyway, they seem to have come to the conclusion that defunding Obamacare is not going to happen.  Not with a Democratic majority in the Senate and a twice elected Democratic President in the White House.

So, they have moved on-as they say after failed relationships-to the next ransom note: the debt ceiling.  

To overly simplify things, Congress passes laws on how to tax and how to spend.  Traditionally speaking, and we're talking up until fairly recently, if there is less revenue to pay for the stuff Congress has told the Administration to pay for in the Budget, it has raised the debt ceiling to allow the Treasury to borrow the money to fully fund these things.  And it has done so 74 times since 1962.  

This would be the definition of a "rubber stamp."

And why would it be otherwise?  Remember.  This is to fund the obligations THAT THE CONGRESS HAS AUTHORIZED.

So.  Now the House wants to tie the increase in the debt ceiling to deficit reduction and decreased Federal spending.  And so you are hearing sappy comparisons to how the government should "live within its means" just like you or I do.  This comparison is inapt.

I am able to use balance sheet accounting to run my life.  I know that I will take if x amount of money and so I only spend x amount of money.  More or less.  

But household budgeting is different from government budgeting. Families grow.  Members die.  I don't print money.  I'm not raising a military force.  I'm not paying retirement benefits.  My obligations are merely to provide for myself.  

And my personal obligations are not mandated by law and are not guaranteed by the "full faith and credit of the United States." But here's where the "household budgeting" meme has some applicability to this particular crisis.

If I default on my debts, or pay them late, my creditors are likely to charge my a higher rate of interest the next time I borrow money.  Same with the Government.  If the sovereign debt of the United States of America goes into default on October 17, then our  creditors will act just like GMAC and charge Uncle more interest.  

Some fools have suggested that Treasury piecemeal some of its obligations until the crisis is resolved.  Maybe pay interest on bonds first.  Social Security next.  That sort of thing.

This is madness.  A default is a default because the government's obligations are backed by the "full faith and credit" of the United States.  Period.

Just remember.  If this isn't fixed by October 17, then the government won't be able to borrow the money to pay for the bills that CONGRESS ORDERED IT TO PAY.  

Thus endeth the Civics lesson.  

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