Echoing the words of President Kennedy, “We will go to the moon and do other things, NOT because they are easy but because they are HARD.” In a nutshell that is what raising
The elected politicians of both Republican and Democrat parties can politicized the issue of debt limit from
There is time and place for politics but this one in particular is not for it. Hey, no one can blame the politicians for not trying but it is time for them to quit dancing around and sit down and do the business of the people. Politicians are looking back at their constituencies and home base to determine what and how to negotiate. That is all good and dandy to seek support from your base, but in finality an elected politician be it the president or the speaker must make the tough decision. That is why they were elected in the first place to represent the people and make decision that is good for the country.
The die is cast and the Federal debt limit must be raised at the allotted time and failing to do so will come with economic ramification that will thicken economic hardship for the American people. Both the Wall Street and
American greatest economic asset is the confidence that global economic players have in it. Investors are always trusting in putting their scarce resources in American by buying T bills and bonds knowing quite well that it will be redeem at the due time. Therefore when
We have come to take this for granted the confidence we and rest of the world have in our economy. But this confidence was not built in day; it takes years of accumulated hard work and sacrifices by great men and women of this country, our framers, leaders and hard working tax payers who endeavor assiduously to solidify and consolidate this confidence and trust.
The greatest peril with such a scenario is that US cannot afford to pay higher interest rates on debts because they do not have the money and with $14 trillion debt, the debt servicing will take a big chunk of the budget expenditure. That in turn will threaten the welfare programs provided by the government.
The American people will be faced with shift austerity measures as a result of downgrading of the credit rating. Subsequently, most of the programs offered by the government will be terminated or greatly slashed and cut down drastically.
The government will resort and compel the Federal Reserve Bank to print more money and that is a fertile ground for higher inflation.
The greatest disaster that will come with the inability for the government to raise the federal debt limit will be a rising inflation resulting from printing of paper currency (dollars) in order for the government to meet its financial obligations. The making of higher inflation with lower credit rating will make life difficult for American people as it comes with higher unemployment, higher interest rates on credit cards and depreciation of standard of living.
Momentarily, the heat of inflation is beginning to show is ugly face gradually. But when the raising of debt limit falls apart, the surging inflation will make life difficult because dollar will worth less for domestic consumption. In this case employers will let go of more workers as result of economic slowdown and households with fixed incomes will not meet up paying their bills and providing for their loved ones. Economists are predicting a fresh recession not just double dip. All the gains made by this administration will fall apart and economic suffering will mightily increased.
Compromise is the Answer
In actuality lifting the debt ceiling is more of a fiscal problem than political but it needs political management. The executive and legislative arms of the government must do something real fast and come to some sort of agreement. There should be a meeting of the minds and there must be the ‘c’ word which is compromise.
President Obama and Speaker Boehner must find a common ground to strike a deal in order to avert the ramification that will come with the inability to raise the debt limit. This is a serious business and compromise is the answer. Politicians from both parties must be willing to leave their comfort zones and loosen their ideological nets to make the great compromise and save the day.
Emeka Chiakwelu is the Principal Policy Strategist at Afripol. Africa Political and