A blog by Jacob
The problem: Our federal government has maxed out its credit cards.
Obama’s solution: Get more credit cards, and don’t negotiate with the Republicans about alternatives.
Republican’s solution: Go ahead and get more credit cards, but only if you reduce how much the government is spending.
One of the things I’ve expected to hear in the Republican primaries was the candidates desires to cut national debt and increase jobs. When it comes to running a campaign, Newt Gingrich apparently can’t do either. According to recent news reports, the Gingrich campaign owes slightly more money than it has. In February, it spent more money than it raised. And recently, one third of the campaign staff was laid off.
During the Clinton presidency, Newt Gingrich united Republicans, but his continued campaign continues to run contrary to his previous accomplishments.
The latest U.S. government debt debate was very painful, and congress should but probably won’t, learn from that pain.
The problem is that our government spends way more than it collects (from taxes). To make up the difference, the government takes out more and more loans to pay for all that spending. After years and years of spending like a crazy college student with their first credit card, the government has racked up tons of debt.
The latest round of some members of government begging for the ability to take out more debt, and other members of government trying to put conditions on the increased debt allowance, should teach congress that nothing is free. Every bit of spending comes at a price. With the latest debt debate, congress took a quick glance at the price tag of all that debt they’ve racked up, and it hurt.
So hopefully the next time congress wants to approve some amount of spending, start a new program, or join a new war, they will remember the price of spending. The next debt debate, which is right around the corner, will be a lot more painful if congress keeps on agreeing to spend more and more. We know that more government spending cuts are coming up, so congress needs to realize that every dollar spent now means an additional dollar cut from other programs like medicare or social security.
Some people confuse the terms Deficit and Debt when talking about our nation’s finances. I thought I would spend a second to describe the difference.
When we talk about the National Debt, we are talking about the amount of money that our government owes people, companies, and even foreign nations. This is comparable to a person having a home loan, several car loans, lots of credit card debt, and IOU notes written out to everyone in the neighborhood.
The National Budget Deficit is the amount of money the government spends more than the amount of money the government collects. A person having a budget deficit would likely be putting more debt onto a credit card than payments to pay it off. Every year the government works out the budget, that is, they decide how much money they are going to throw at what. When they’ve spent more money than is collected through taxes, they say, “Oh well, we’ll just take out more loans.” The National budget deficit is the amount by which our National debt increases.
When there is talk about “reducing the deficit,” they aren’t talking about reducing the national debt. They are just reducing the rate at which the government takes out new loans. “Cutting the deficit in half” is saying, “We are only going to take out half as many new loans this year.”
I got a letter in the mail which read:
Your student loans serviced by UHEAA have been paid in full… Congratulations on paying off your student loans.
I actually paid it off a couple of months ago, I’m not sure why it took them so long to figure it out. It always feels good to be debt free.