Do U.S. Debt Ceilings Matter?

"A default would impose a substantial tax on all Americans," Treasury Secretary Tim Geithner warned Congress in January, adding "any default is unthinkable and must be avoided ... so that the full faith and credit of the United States is not called into question."

As the U.S. reaches its debt ceiling, there are the usual threats from some Congressmen they will not expand the debt ceiling without some spending cuts. After prancing in front of the TV cameras to condemn reckless spending, they will then vote to raise the debt ceiling.

This happened seven times under President Bush and it will now be four times under President Obama who has been in office just over two years. Despite their claims to the contrary, neither Congress nor the President has the courage to confront this soaring deficit.

But Treasury Secretary Geithner is right, for there is nothing standing behind government bonds beyond the confidence investors have in the government. Many investors are nervous about America's out of control spending and some have stopped buying U.S. bonds.

What's the solution? The U.S. must slash spending by several hundred billion dollars AND raise taxes sharply just to offset this year's $1.6 trillion shortfall. But it refuses to do that for politicians believe Americans will become furious when they learn how bad the situation really is. So for now, the U.S. sinks deeper in debt by the minute as our politicians pretend this isn't happening.

Or as my friend and webmaster Jon Barnes sees it: "You talk about reckless spending, but I don't see that as the main problem. It's the continuing tax cuts that were enacted by GWBush, when additional security after 9/11 (TSA) plus the cost of the impending wars, should have prompted a large tax Increase across the board. But because the GOP is a 1 trick pony, they had to reduce taxes and borrow all the money for their wars and tax cuts. Bush's administration SCREWED US BIG TIME."

In any case, we must raise our voices for fiscal sanity and confront the financial hardship we will face before it gets worse. This is our nation and our responsibility for ourselves, our families and for our brethren all over the world that bought U.S. bonds. Most people can't imagine the U.S. defaulting on its debts because it never has defaulted before, but never before has it put itself on the razor's edge of bankruptcy.

Dick