Friday, October 11, 2013

The Full Faith And Credit Of The United States

The phrase "full faith and credit of the United States" is one that I often hear and a phrase that has come to fill me with discuss. The phrase is suppose to inspire confidence but I find it hard to have much faith in a country that will not face the responsibilities of living within its means and balancing its budget. Year after year the uncontrollable spending continues. Making things even more bleak is that no real effort it being made to address the issue of budget deficits in coming years and the forthcoming growth of entitlements.

President Obama has taken the position that he wouldn’t negotiate on Republican demands on the budget or other issues until the government re-opened. Obama has urged Congress to pass a clean debt-limit increase and a so-called continuing resolution to reopen the federal government. He has indicated willingness to consider short-term agreements but this position avoids the big problem and is nothing more then political theater and fails to address any of the real issues.

Treasury Secretary Jack Lew reiterated Thursday before the Senate Finance Committee that the deadline for raising the borrowing limit is Oct. 17, this is when the government runs out of borrowing authority. In his testimony, Lew harshly criticized the idea of “prioritizing” payments the government makes. That idea would just be “default by another name,” he said. Lew pressed Congress for a long-term increase in the debt limit but also said that Obama would accept a short-term extension. 

An extension long or short term that raises the debt ceiling should not allow Washington to feel that the problem has been solved, all that does is kick the can down the road. It is only because this mode of operation has become common by many countries across the world that it is acceptable, in effect we are no worse then our competition. Being called the cleanest dirty shirt in the closet is not a complement. Sadly from the reaction of the markets this is an acceptable solution.

 Footnote; Your comments are welcome and encouraged. If you have time check out the archives for other post that may be of interest to you. The post below looks at math behind our current spending and the real cost to each of us.

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