Earlier this week we asked the following questions of our Bridge Alliance, Coffee Party and Fulcrum communities regarding ripples in the financial sector over concerns with the debt ceiling:
- Now that the country already possesses extensive debt, what is the best approach towards properly balancing budget and spending priorities?
- Is the debt ceiling a practical apparatus by which to assess the national debt in our modern day financial system?
With the “debt crisis” averted for now, many have turned their eyes towards the future of our economy. With the vitality of our current economic system being called into question, there are indeed opportunities for adjustment in order to properly secure the country’s future. And, while many of us would love for fiscal policy to be independent of political ideology, the two are inextricably linked; highlighting some of the dangers present in our highly polarized political puzzle. Regardless, as the saying goes, “victory has 100 fathers, while defeat is an orphan”; the debt ceiling agreement was a win, at least for now. The negotiations that led to the appeasement of debt ceiling constraints were effective. In this case, our elected officials displayed an almost shockingly tactful level of coordination as they compromised their own ideology for the welfare of the American people. I repeat, this is a win, for now.
Many of your thoughts reflected a similar level of tempered optimism. But, as most of us don’t have a degree in finance, the ease with which the average American can denote issues within an economic system often deemed as “complicated”, speaks volumes to the issues that exist. It is fair to say that reports of the proverbial sky falling were a bit overplayed. Regardless, even if the sky is not falling, it may have begun to drizzle. Lawmakers must ensure the roof is tarred and sealed; or we should grab an umbrella just in case.
Here is a sampling of your thoughts. Responses have been edited for length and clarity.
Yes, the debt ceiling is still a practical tool. Anything that can be done to focus the nation's attention on huge annual deficits and rising debt should be considered. However, the latest debt ceiling agreement did very little to reduce deficits and nothing to reduce debt. Both parties continue to kick the can down the road. The 2018 Trump tax cuts cut revenue, while the Biden Administration continues to support increased spending. With rising interest rates, the cost of servicing federal debt continues to rise. - Richard Davies
Debt is not a bad thing, by itself. Whether or not an entity, whether government or individual, has too much dept is a concern but just how much is too much is complicated. Government expenses, or debt, can only be properly understood by looking at things over the long run. - Fred
The debt ceiling is impractical. We are the only country in the world with this exact "debt ceiling" thing that hangs out there as a tempting hostage for either party to take advantage of, depending on which is in power. - Gerry Langeler
We need comprehensive fiscal reform. Taxes must rise and major business exemptions must be trimmed back. Social Security and Medicare must be overhauled. These are major reforms and I don’t know how we will actually accomplish them. - Richard W Sinclair
We need to substantially increase revenue and scale back defense spending. Others may disagree, but those disagreements should be hashed out in the budget process. It’s absurd to either revisit them when deciding whether to pay our debts. - Chris Goelz
Many government outlays are investing, with some reasonable expectation of a predictable positive return. Money for health care, education, environmental protections, etc., is investing for the well-being of individuals and society. Other outlays are speculating, merely assuming that the people who get the funds will use it for productive purposes. This category includes nearly all programs "to create jobs," tax cuts and subsidies to corporations and wealthy individuals. Yet nearly everyone lumps it all together as "spending." Going forward, analyzing government expenditure through these distinctions, we can cut superfluous programs, minimize wealthy tax breaks, etc. - Steven Shafarman
We need a fundamental overhaul of our budgeting process. Congressional reforms made in 1974 have made us significantly less effective when it comes to budgeting. Prior to 1976, the government didn't shut down over funding issues, since then it has shut down 22 times. We need to simplify and reevaluate the role congressional committees play in the budget process, eliminating excess and redundancy. Finally, I think we should spend time and resources evaluating the efficiency of federal programs. We fund many programs that underperform, but we continue funding them because we don't evaluate them based on outcome. The alternative would be to raise taxes. It just isn't sustainable to keep the same amount of income but increase spending levels. Without addressing these structural issues, we will continue to live in this debt limit death spiral. - Hillari Lombard
We need to take a look at the biggest drivers of our debt - defense spending, Medicare, and Social Security spending. Medicare and Social Security can be made solvent with no impact on current beneficiaries and minimal impact on future beneficiaries. We can continue to devote sufficient resources to ensure we have the best military in the world, but we should be able to do that while keeping overall outlays flat. - Allan Cohn
There is nothing wrong with the debt ceiling apparatus itself, it should not be treated as some terrible financial catastrophe. Rather, it could be used to force the kind of fiscal restraint that is necessary to address the outstanding debt problem. - David Butler
The only good the debt ceiling accomplishes is to compel periodic, transitory and superficial attention to the consequences of years of irresponsible neglect by all American stakeholders, especially the voters and their representatives. - Bernard Sucher
The debt ceiling is an obsolete mechanism and should be eliminated through legislation. - Bob Meyer
Any financial or economic system is made possible by government policies and infrastructure (upholding contracts, the court system, regulatory mechanisms, etc.). The debt ceiling is one more policy that has created the existing system. It does appear to be a very effective tool for certain political goals that align, broadly, with the goals of the financial system, with some risk attached. - Daniel Pritchard