Witness: You just experienced a moment in time so rare, so thought-provoking, that everything else you’ve seen might just pale in comparison. Even if you heard nothing of the reports about the debt crises, you’ll eventually feel the impact, somehow. That’s because common sense tells us: anything times a trillion is a lot.
Within the last few days, the world saw a remarkable display–across divergent interviews and political parties, spanning a pair of sundry if sometimes subtly different worldviews–where the de facto leaders of United States politics played dumb on the biggest factor of all: the money.
Representing both the White House and the House of Representatives, these individuals gave testimony to something that just doesn’t fit. In each case, responsibility was deferred with a claim of ignorance: “I don’t know!” Considering the significance of context, this development calls for far greater transparency.
The topic in question is federal spending, and specifically, the debt ceiling. America’s accounts payables exceeds its accounts receivables by unprecedented levels, resulting again in members of Congress clamoring to increase their statutory borrowing power – the USA’s credit card limit.
Hanging in the balance is the US Treasury’s ability to meet its financial obligations, which include healthcare costs, pension funds, military expenses, and everything else financed by the
multi-trillion-dollar federal budget. Much of the discussion focuses on debt, especially interest payments. Why?
A main reason for concern about debt payments is our credit rating, and how it would likely be impacted by a default – even a slight lowering of our score could result in significantly higher borrowing costs, which would hog-tie an already constrained economic landscape. That would be bad.
We should keep in mind that very recent financial regulations took a real swing at credit ratings agencies such as Moody’s and Standard and Poors. This was done ostensibly to improve transparency and reprimand these organizations for their failure to accurately predict major financial disruptions.
Specifically, new financial regulations no longer honor the work of these ratings agencies, and that will negatively impact the revenues of these organizations, which now largely control the destiny of our country’s credit score. People are people, and no matter how professional they get, emotions do exist.
What’s most troubling about the current rhetorical charade is that each party has openly abdicated. Our government consists of branches, the rules for which remain articulated in our Constitution. There’s no question about who gets to make which decisions: Congress legislates; the Executive Branch decides.
In the current situation, that means the White House bears the responsibility for determine whether Social Security checks go out; while Congress can prepare the necessary legislation to extend our government’s borrowing power – which we mustn’t forget hinges on domestic and foreign interests.
The problem with wasting time on superfluous, if not outright obfuscating questions, is that there are real questions that don’t get sufficient attention. For example, why did $43 billion in federal aid for home foreclosures go unspent? We know that the housing crisis is at the center of this whole debacle.
And then there’s the question of fraud in our Medicare system, which some estimates place at roughly $50 billion per year. That much money would go a long way toward any number of healthcare goals. It would go quite a ways toward solving this whole deficit issue as well.
We explore this and other serious questions–such as the recent impact of the TARP bailout— in our new program, appropriately named “Federal Spending,” produced in conjunction with Breaking Gov.
Join us if Thursdays at Noon ET, as we take an apolitical view of the money trail: who gets it, how, how much, and what do we get in return? Everything else is just a side show.
Resources for further reading from some of our most recent programs: