Amidst all of the debate about the debt ceiling, my big question is, who will win? I think this question is particularly interesting because most Americans do not know what side they are on.
First of all, Americans are desperately looking for a solution in Washington and are not finding it from either party. In 2008, the electorate ran from President Bush and the Republican party to heavily endorse the Democrats. Two years later, Republicans recorded the biggest turnaround in our history. Yet, despite the pendulum swinging back and forth, the Congressional approval rating is currently sitting at 18%, according to Gallup polls.
If you look at the debt crisis, 69% of Americans say Congress should not raise the debt ceiling, according to a recent CBS poll. The debt ceiling has been raised 74 times, but this time it would seem to be different. Further, 73% say spending too much is to blame for the debt crisis (vs. not taxing enough), according to a Gallup poll.
It would seem that Americans support reducing the deficit by reducing spending. However, when people are polled about whether they still support cutting spending when the spending cuts affect them personally, the tide changes quickly. More specifically, people get really nervous when cuts to entitlements (Social Security, Medicaid, Medicare), which make up over 50% of the budget, are discussed. According to Gallup, 66% are worried about cuts to Medicare, and 65% are worried about cuts to Social Security.
Gallup polls also show that Americans are looking for their leaders to make compromises and work together. I have to give credit to President Obama for announcing today that he is open to increasing the age for Medicare eligibility from 65 to 67, which goes against his party lines. John Boehner also seems to be willing to negotiate on a lot of issues as well.
Even if Boehner and Obama develop a compromised plan, it is not a guarantee that Congress will vote for it. When it comes to voting, the politicians that toe the party lines are often the ones that get re-elected. Michelle Bachmann has become quite popular for voting against compromises, despite her one vote never being a deciding vote.
So who wins in this battle? I think the only potential victor is the American people if three things happen:
- An agreement is reached by August 2nd so we do not default on our debts and hurt our credit rating.
- We need major, but gradual cuts to the long-term budget. Our annual deficit is conservatively $1.5 trillion, which is $15 trillion of additional debt over the next 10 years or roughly $29 trillion in total debt. Congress and President Obama have discussed reducing the deficit (not the debt) by $4 trillion over 10 years, which would still make our debt be around $25 trillion in 10 years. We need major cuts.
- Entitlement programs have to be changed in a humane, but impactful way. The entitlement programs are the ticking time bomb, growing at uncontrollable, exponential rates. If these programs are not changed, then we do not have much hope for a legit solution to our budget issues.
It is going to be difficult to find a solution for this one. Ultimately, all of the solutions above involve self-sacrifice and personal responsibility by all Americans. We can either be a nation that fights through a tough problem or we can be a nation that pushes the problem down the road. Either way, we’re going to have to face these issues eventually.
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