Imagine you had a pesky neighbor who somehow took out a mortgage on his house in your name and by some legal trickery you were obligated to pay for it. Imagine watching this neighbor throw drunken parties, buy expensive cars, add more rooms to the house, and hire dozens of people to wait on him hand and foot. Imagine that he also managed to take out several credit cards in your name. One by one, he would max them out and then use your good name and credit to obtain another credit card, then another and then another. Each time, this neighbor would claim that he needed the new credit card to pay interest on the other maxed out credit cards. If he defaulted on those cards, your credit score would be hurt and when you wanted to buy something for yourself, it would be more difficult to get a loan and the interest you paid would be higher. Imagine that you mulled this over, and time after time, said nothing as he filled out more credit applications so he would not have to default on the other debt taken out in your name. Meanwhile, another shiny new Mercedes appears in his driveway. At what point do you think you might get tired of this game? And, even though you are left with no really good options, do you think you might eventually tell him to go ahead and default, just stop spending your money!
This analogy demonstrates the position we are in with our government and the debt ceiling. The government has run up a huge debt in the name of the American people, who are sick and tired of being on the hook for it. There are no really good options left. Defaulting on a portion of the debt may not be without costs, but it is better than handing the government yet another credit card.
The government is using the usual scare tactics to strong-arm the people into going along with more spending. Remember the rhetoric surrounding the big bailout of October 2008? We were told, not that this would be calamitous for the banks, but for the people, who would continue to experience massive job losses and foreclosures. We were told that the economy would sink into a deep recession if this money was not handed out to too-big-to-fail corporate cronies. So, after much hand-wringing, leaders from both parties, against unprecedented public outcry, agreed to shower money on the banks and increase the debt. The banks learned nothing, except that Washington will come to their rescue, no matter what. The people, however, continued to lose their jobs and houses anyway, and here we are, still in a deep recession.
When you read the above example, your first reaction might have been to dismiss the neighbor’s debt as illegitimate and in no way your responsibility or your problem. You would be right. No fair-minded legal system would hold you responsible for such a debt, and would instead cart your thieving neighbor off to jail. Yet Congress can impose liabilities on you, your children, and grandchildren without your consent, and even without your knowledge. This is another example of government holding itself above the law. Much like the TSA claims the right to molest us, yet arrested a woman who turned the tables last week, stealing somehow becomes legitimate when the government does it.
We supposedly live in a nation of laws. For once, government needs to heed the law regarding the debt ceiling.