Sunday, May 15, 2011

Distracting us from the real crisis

The noise about the debt ceiling is growing rapidly, and it's probably going to get louder and louder. It's usually a good idea to keep in mind that whenever the pols get excited about something, it is almost always a distraction.

This is no different.

The pols will jump up and down about defaulting on our payments if the debt ceiling isn't raised. And although we will, technically, be in default, what that really means is that we will make our debt payment a few days or weeks late. It is far more important that we get our finances in order, by reducing ongoing entitlement payments, so that we can make those debt payments over the long run.

This is the exact same thing as making your mortgage payment on the 12th of the month because you had to reorganize your budget. Were you late? Yes. But the mortgage company isn't too concerned because you are taking steps to ensure that they will eventually get all of the money due them.

Unfortunately, polls and pols usually react to the noise. And that means that we'll probably get no real reform in exchange for a raise in the debt ceiling. We'll make the current payments on time and jeopardize our ability to finance our activities in the future. Unionized government workers will protest and strike in order to keep their slice of the pie, impoverishing the nation as a whole. It won't happen overnight, but the math dictates that it will.

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