Now that the latest manufactured political crisis is over, we can breathe easier for a couple months. We don’t have to worry about the government being shut down or a default on U.S. debt – until the next set of deadlines in about 90 days. Are we are supposed to feel good, until the crowd in Washington decides to do it again? And chances are they will, because nothing has changed. For my part, I feel beat-up, manipulated, abused, and resentful.
So much has been written in the last month about the debt ceiling and the government shutdown that I wonder if it is worthwhile writing anything else. The topics have been analyzed and scrutinized from seemingly every possible angle except one. That angle is the point of view of ordinary folks, among whom I include myself. Like many people my age, I am retired. I also have a mortgage. My income comes from two sources, social security and a pension. Fifty percent of my pension is invested in the stock market. I have, therefore, a strong interest in the continued fiscal stability of the U.S. government as well as the financial success of American business. Continued talk about a possible failure to make social security payments, increasing interest rates, debt default, and so forth causes stress – lots of stress, especially that we have not completely dug ourselves out of the debacle of 2008 in which big banks, Wall Street, and auto companies (but not ordinary folks) were bailed out with taxpayer money.
If the major economists are to be believed about the catastrophic effects a default on U.S. debt would wreak in the world economy, then anyone in touch with reality should approach such an event with a respectable amount of caution, if not fear. (See for example, Businessweek.com, October 14, 2013, or Paul Krugman, October 10, 2013.) And yet in the final analysis, 144 members of the House of Representatives voted for default and a continued government shutdown. My own representative, Paul Ryan, was among them. Ryan, who has made his reputation as a fiscal conservative with a plan to reform our major entitlement programs, was apparently willing to risk the destruction of the U.S. economy because he could not have his way. As a citizen observer I was dismayed at the cavalier and nonchalant attitude Ryan and his colleagues displayed as they endangered the financial security of the people they are supposed to represent. A number of Tea Party Republicans even suggested that a U.S. default on its debt would not be such a bad thing. To admit such ignorance in public should be an embarrassment. Failing to heed the warnings of the U.S. business and banking community, it was no surprise they were willing to ignore major international economic interests as well.
The political and economic fallout of approaching default on the national debt is not yet clear. There are already international political costs. President Obama was unable to attend the Asia-Pacific Economic Cooperation summit in Indonesia and the Association of Southeast Asian Nations summit in Brunei. Likely economic costs will be rising interest rates and a downgraded credit rating. These will have a direct effect on ordinary American citizens who borrow money and pay mortgages.
Public confidence in the U.S. Congress is at a historic low. Leaders in the U.S. Senate and the House of Representatives are now taking to the airwaves to promise the American public that a government shutdown will not be repeated in January. We shall see. The joke that has gone viral on the Internet reminds us that the collective noun for a group of baboons is known as a “congress.”