Tuesday, August 2, 2011

Reflections on the Debt Limit Compromise

The debt limit crisis is over. We dodged a bullet and I am glad.  I was worried.  Not only was I worried for our nation, but I was worried about the impact a default would have on me personally.  I am approaching retirement age and I did not want to see my life's savings tank. I am also glad to see that we avoided the crisis that would have ensued if Congress would have failed to raise the debt limit and Obama would have invoked the 14th.  Had he done so, we may have witnessed the largest Constitutional crisis since the Civil War. Had he invoked the 14th, I believe there would have been blood flowing in the streets. So, while I am glad Congress reached a last minute compromise that avoided a calamity, I am not popping any Champagne  corks.  I do not feel like celebrating.

Essentially, we have kicked the can down the road. We have bought a little time. I wanted to see larger spending cuts and a long-term solution like the CAP Act which would limit Congress's spending and a constitutional amendment that would force a balanced budget. This agreement, while it reduces future spending, it did not actually cut spending; it cut spending from the level that spending would have otherwise been if we had done nothing. Only in Washington is a spending increase called a spending cut.

Nevertheless, I think we have made a move in the right direction. The conversation has been changed from how much more can we spend to how much can we cut. That is a good thing.  I also like the debt commission created by the compromise, however one Congress can't bind a future Congress. In fact, a current Congress is not even bound by its own actions. It can repeal or modify anything it passes. There is nothing in the act that would force Congress to act responsibly. Congress has gone on record now however, and it will not be easy to undo what has been accomplished. This is a step in the right direction, but it is like turning an ocean liner; it can't turn on a dime.

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