Tuesday, July 26, 2011

How Difficult Is This Debt Crisis Really? Six Simple Principles

I am not an economist in any sense of the word. My idea of a debt crisis is when I forgot to pay the $73.21 balance due on my Visa card, thereby triggering a $35 late payment charge. I churned for days, worried that my credit rating was ruined for decades. I was sure I'd never be able to buy a house again.

So obviously I'm not one to talk about solutions to our $14.3 trillion national debt. There are way too many zeroes in that number to hold my attention through dinner. But it does remind me of the famous quote by the eloquent late great Senator from Illinois, Everett Dirksen, who once said "A billion here, a billion there, and pretty soon you're talking about real money." I really think that is where most of us are when it comes to the financial issues in play. We nod our heads knowingly and hope our kids won't ask us to explain it.

But I'm also inclined to believe that the mind-numbing figures may be obscuring the simple, albeit conflicted, issues that are at the heart of the matter. I've been listening and reading, and I've worked up a half dozen simple principles that seem to me are pretty hard to contest. Couldn't we begin with these?

Simple Principle #1. Pay your bills. The debt ceiling is the legal limit set by Congress to pay the liabilities already incurred by that legislative body. Duh! How hard is this? Pay your bills.

Simple Principle #2. Balance your budget. It's kind of a simple idea--don't pay out more than you take in. Normal Americans understand the consequences of not balancing their budget--it involves terms like foreclosure and repossession. Obviously, few people write a check for a house or car--nothing wrong with manageable credit. But come on. This isn't rocket science (something I know even less about than economics).

Simple Principle #3. Tell the truth. I don't know how one does this, but we just fought two wars without a budget. Kind of skewers the numbers when one is figuring how many seniors will suffer reductions in their Medicare and Medicaid and such. Numbers lie, and so do those who manipulate them for personal or partisan purposes.

Everett Dirksen listens
Simple Principle #4. Protect the vulnerable. I was pleased to see that President Obama met with faith leaders on July 20 to discuss the impact of impending budget cuts on the poor. Thousands of religious leaders have signed onto a document entitled "A Circle of Protection," offering a rationale for why it is necessary to protect programs for the poor. They seem to get overlooked by certain political groups.

Simple Principle #5. Commit to fairness. Americans claim that all persons are equal, but we know they are not. Some are smarter, some run faster, some are prettier, some are richer. The way to honor the principle of equality is to have a society that is fair. Those who have more give more. Not only should they have to, they should want to.

Simple Principle #6. Prepare to compromise. I am stunned by the hundreds of members of Congress who have signed a pledge to never support any tax increase of any kind. Ever. Such a pledge renders the signatories completely marginalized as a participant in any meaningful negotiation. The venerable Senator Dirksen said it well when he declared "I am a man of fixed and unbending principles, the first of which is to be flexible at all times." Oh for the likes of Mr. Dirksen these days.

So there it is. I don't know the global consequences of defaulting on the U.S. debt payments. Sounds kind of serious to me, but I don't truly know. I don't know what will happen to my mortgage or my meager investments if Standard and Poor's downgrades the US AAA credit rating for the first time in history. Seems like it's something we'd prefer not to happen. Some politicians say it's Armageddon; others say just a hiccup.

Here's what I'd like. Let's see if we can get agreement on the six simple principles. The debate would be nothing if not entertaining. And then, having agreed to the simple principles, I'll bet those zeroes won't seem so formidable.

Revised 12/07/2011 (Minor alterations, including title)