Debt Limit & Government Shutdown

This will be one of the few posts that I get political, but with so much uncertainty I had to weigh in on the issues that are currently happening at the federal level with the discussion of raising the debt limit and at a state level with Minnesota already in the longest government shutdown (out of all states) in recent memory. Both issues are different, but have a lot of similarities. I would expect many people to feel the same emotions as I do, but maybe different solutions on how to handle both issues. Let's dive in.

Federal Debt Limit
The issue is that the US currently has an approved debt limit of $14.294 trillion ($14,294,000,000,000), but needs to raise the debt limit because the current budget's expenses exceeds revenue. The gap is projected at $2 trillion, which means the president is asking congress to raise the debt limit it $16.7 trillion. The president can't raise the debt limit without congress's approval. To keep a very long story short Democrats want to increase the debt limit and taxes on the richest 2% of Americans while Republicans are split on if they are willing to raise the debt limit. Some want drastic spending cuts in next year's budget and others are willing to let the government run out of money and tough luck after the money is gone.

Historically I'd be in the camp that says if you can't pay for it, don't buy it. Let the government run out of money. Would we really not be able to pay our obligations to the interest on the debt, military pay and social security? I think we have enough money to cover our most critical expenses, but I also know that there is so much uncertainty going that route. What if we don't have enough money and we do default? Could that lead to collapses of the global economy or a depression that would be catastrophic that we wouldn't fully recover? I say it is possible. Just the uncertainty would damage the markets, pull foreign money out of the US economy, weakening our dollar (even more) and ultimately leave the US in a very vulnerable situation.

The problem is that Washington is so concerned about the 2012 election that I don't feel that everyone (both parties) have the country's best interest in mind. We have career politicians that are looking out for themselves and their party that they aren't willing to negotiate and get a deal done. For example, today Eric Cantor (House Majority Leader) called President Obama out for storming out of negotiations. SO? How does saying that get a deal done? Granted I wasn't in the room, but how does bashing the leader of the free world help get a deal done? Both parties are spinning the news to show how bad the other party is. I'm sorry, but I thought we lived in the United States of America, not the Divided States of America.


Ultimately the debt ceiling needs to be raised, but there need to be a lot of conditions placed on it.
1. The budget is balanced going forward - Only to be raised again in the face of financial ruin (Bank failures of 2008 for example)
2. Debt needs to be paid off - How much debt is acceptable to have? "The National Debt has not gone down (from year to year) since the end of the Dwight Eisenhower administration." (http://130.94.230.21/debt_history.htm)
3. Bush's tax cuts need to be extended through 2013.
4. Long term look at a flat or fair tax (this would eliminate tax loop holes that frustrate so many Americans)

Minnesota's Government Shutdown
Now onto a local angle. We are about to finish day 13 of the government shutdown and instead of Governor Dayton being in town at the negotiation table he is traveling the state campaigning his stance. Republicans haven't submitted a budget since hours before the government shutdown 13 days ago. Both parties have dug in their heels and planted their flag. Neither side has a desire to move from their position (kind of like me watching a game at Target Field). We were already without 22,000 employees, the DMV and Canterbury, but now the state of Minnesota could be without beer. "The MillerCoors brewing company landed in the cross hairs of Minnesota's government shutdown Wednesday when state officials said it would have to stop selling its beer in the state because of expired licenses" (http://www.startribune.com/politics/statelocal/125526248.html). I don't drink, but this is ridiculous. This now isn't just impacting the 22,000 laid off employees, it is now going to impact small business and restaurants.

Back to the issues, the state to balance the budget before the government can reopen. What does that mean? It needs to make more money and spend less. How to get there is a where the problems come in. Governor Dayton and the Democrats want (and campaigned) for a tax increase on the wealthiest 2%. Republicans want to make up the deficit by spending cuts and "sin" tax (alcohol and tobacco). My problem with the suggested tax increases (wealthiest 2% and "sin") is that it doesn't impact everyone. It impacts the minority of the population. I wouldn't be impacted one cent on either of these taxes (at least not today, but I fully expect to be in the top 2% someday). It is so easy to say tax them or tax that, but don't you dare tax anything that impacts me. What about a tax on clothing or food? I wonder if the Minnesota legislator has Minnesotan's in their best interest when elected officials are still taking a paycheck, but they laid off 22,000 employees and why is the Governor's chef deem a necessity?

The state needs to do five things to get the government running again.
1. Leave state income tax the same
2. Look into state gambling (racinos & state sponsored casino) for additional revenue
3. Put a 2% tax on clothing
4. Cut government spending to ensure that we have surplus in the future. Government doesn't have to spend all revenue it takes in
5. Get a "lights on" bill passed until final agreement can be reached on the budget

These are a few of my thoughts on a broken political system