Raise the Debt Ceiling?

I was watching Ben Bernanke testify before the Senate today. One of the Senators asked his views on raising the debt ceiling, and the possibility of a shutdown of the government. Bernanke said not raising the debt ceiling would be like a family fixing its finances by just refusing to pay its bills. A better, and more honorable, approach would be to meet your commitments and cut up the credit cards and vow to spend no more. Bernanke said that the current debt is for things we’ve already committed to: contractors are owed money, citizens are counting on receiving social security checks… And markets would go into complete turmoil if the US government announced it was no longer paying interest on its debt – and regular people would suffer incredible losses in 401Ks and retirement accounts just when they are starting to look a little better. THINK! Principles are important, but don’t ruin our lives just to make a point. Get the job done the right way – figure out a way to stop spending so much money. But don’t renege on commitments already made – that’s not honorable.


Perplexio said…
I think part of the uproar here in Illinois with our tax hikes was that there was little or no evidence of any effort of anyone in our state government to make any legitimate or meaningful spending cuts.

I think if there had been some semblance of fiscal restraint and cuts being made before the tax hikes were proposed we might have been a little more tolerant of the bitter pill of taxation than we have been.

Basically the way it was handled it appears yes they're going to take more of our money to meet our existing obligations but they aren't going to do anything to curb their spending so chances are there will be future needs for further tax hikes.

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