This may surprise some of our new readers, but the biggest thing on the minds of most members of Congress this week isn't the budget.
It's the debt ceiling.
For those people that haven't heard it defined before, the U.S. debt ceiling is, quite literally, our collective credit limit as a nation. Unlike your personal credit card, where your limit is set by some nameless, faceless bank, our national credit limit is set by a formula built into Federal law - and it's a formula with a ticking clock.
The effect of going over our national credit limit, while similar to what happens when you go over your own credit limit, could be substantially worse. If you go over your personal credit limit, your credit score takes a hit. Because your credit score goes up, the cost of what you've already spent - meaning your interest rate - will likely go up. So your debt gets a bit harder to pay. Maybe you can't quite get the bank to loan you enough money for that car or house you really want - or maybe they won't loan you money at all. Chances are, though, you probably won't starve if you go over your credit limit. And the worldwide financial markets won't collapse either.
If the United States goes over its credit limit, however, it could very well be the end of economics as we've known it.
The reason many nations currently use the dollar as a foundation for their currency, instead of gold, is that - historically - the dollar has been more reliable than gold. The Untied States has never failed to pay off its debts over the long term, and has only had a few minor defaults in its history. In short, over time, we've proven we're good for it, whatever the amount is.
If our current Congress decides NOT to increase our debt ceiling however, the representatives who vote against the increase will be voting to default on our debt. They will be voting to increase - SUBSTANTIALLY - the interest rate we have to pay on the debt we already have. They will be making it substantially harder for our government to get loans in the future, for any reason. And because many other major economies have tied the value of their currency to the value of a dollar, it could cause the collapse of world financial markets. And it's not as though people like Treasury Secretary Tim Geithner hasn't warned Congress about it.
In short, those who vote against raising the debt ceiling will be showing that they're willing to let the whole world economy collapse, just to prove their point that America has been borrowing too much.
Now, as our long time readers know, the staff at The Daily Felltoon tries to be fiscally responsible, if not a bit fiscally conservative. However, we support raising the debt ceiling, if only to stave off worldwide financial collapse. Even John Boehner, before he was cowed like a whipped child, acknowledged the mature and sensible nature of raising the debt ceiling. It's not that anyone, on any side, is denying America has borrowed too much for too long. But this debt didn't happen overnight. It happened mostly over the eight years of the Bush administration, and it will easily take many years more for us to pay it down.
Except, as we mentioned initially, we don't have many years.
The debt ceiling is on a timetable all of it's own, and it will not wait months or years for Congress to hash it out, as Congress did with the Affordable Care Act - or as it's been doing with the Federal budget, limping along with continuing resolutions since late last year.
The responsible choice is an obvious, if not distasteful one. But it is a clear choice.
Satisfy the whining of the infantile Tea Baggers who don't understand economics, and don't care what their actions will do to the world economy. Or... raise the debt ceiling - and then work to bring in more revenue, so that we can pay off our creditors once again.
To us, finding the right answer to this question doesn't require some kind of crazy circus feat.
