No working life in finance is complete without commenting on the debt ceiling farce in Washington. Politicians are mostly trading soundbites rather than engaging in any kind of meaningful debate. We would like to suggest a few additional soundbites that would make the exchanges in Washington more relevant:
- Not raising the debt ceiling is like not paying your credit card to get out of debt: STUPID and INEFFECTIVE.
- All of the proposed plans claim to reduce the DEFICIT, but you need a SURPLUS to pay down debt. Washington is fighting about how quickly things should get worse, not how to make things better.
- Total tax receipts cover the cost of entitlement programs and interest. Everything else is financed by issuing debt. You can't balance the budget by ONLY raising taxes or ONLY cutting benefits.Taxes would have to go up by 50% or entitlements have to be cut by 50%. Not doable unless you like riots in the streets.
- Everybody wants to close the budget gap with other people's money, but we can only get out of this hole if EVERYONE makes some sacrifices.