Jenny EriksonThe new congress has been installed, the Constitution has been read, and now it’s time to get to work. Let’s talk about money, honey, and specifically where it’s going to come from to fund all the spending that our government likes to do.
Funny thing about governments: They don’t make money. People make money by trading goods or services for a paycheck. (This is what is commonly referred to as a job. I know it’s hard to remember in this economy.) The government takes some of that money from you and me in the form of taxes, and gives it to someone else for whatever reason.
Giving away money is super fun. Look! They like us, they really like us! Who doesn’t love to play Santa Claus, offering free health care to all? The government is not Santa, and there are no magical elves working in the ER. Every dollar the government gives away (to Social Security, education, Obamacare, welfare queens, crack monkeys) has to come from somewhere.
Right now, taxpayers (a.k.a. working Americans) fund about 60% of the budget. The rest of the money is borrowed in the form of treasury bonds, borrowed against trust funds, or borrowed from other countries like China or Japan. Much like we all have a limit on our credit cards, the United States has a limit on how much it can borrow. That limit is what’s being referred to every time you hear the phrase "debt ceiling."
America continually spends more money than it brings in, which means that we are always getting closer and closer to our limit. Every so often, Congress has to go in and fiddle with it, and vote to increase it. Last time that happened was February 2010 -- it was predicted to last until late 2011. Current predictions show us hitting the ceiling in the early spring.
Now lawmakers are once again considering raising the limit on our proverbial credit card. Treasury Secretary Tim Geithner warns, “A failure to raise the debt limit would mean the government would not be able to make the payments on the current debt, which stands at $13.96 trillion.”
Our debt is now so out of control that we can’t even afford to make payments. Obviously, the solution is to take out more loans. I believe that’s called robbing Peter to pay Paul -- or paying MasterCard with Visa. I don’t see the point.
The only solution is to cut the spending. There are a number of household budgeting guides I’m sure politicians could use to figure out this complicated process. Bottom line: Stop spending more than you bring in.