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While everyone in Washington right now is patting themselves on the back in the wake of Wednesday's debt ceiling deal, the reality is that it does little to address the nation's deepest budget issues.
True, the Band-Aid agreement will fund the U.S. government through Jan. 15 and lift the debt limit through Feb. 7.
But all it means is that Congress has just 90 days to take meaningful action on the problems that led to the government shutdown and debt ceiling fight in the first place.
If it doesn't, 2014 could be a very troubling year for both Washington and the U.S. economy.
Just look at these four disastrous problems the debt ceiling deal fails to fix...
What the Debt Ceiling Deal Failed to Fix
Some commentators argued during the shutdown that having a debt ceiling makes no sense. Some even argued that a U.S. president should have unilateral power to raise the debt ceiling as needed.
But they seem to miss the point that the debt ceiling isn't the problem - it's the rising levels of debt that Congress continues to rack up at a record pace. Yes, we have to pay our bills, but every now and then we have to be reminded of just how out of control those bills have become. The limit on the borrowing authority acts as a reminder and should have spurred some conversation about how the United States will bring its long-term liabilities under control.
That didn't happen this week.
The U.S. national debt is on pace to reach $20 trillion by the end of the decade, which means that if interest rates rise to 5%, the nation will need to pay $1 trillion a year just to service the debt.
The national debt has increased by 55% since President Obama took office. This translates into an unbelievable $123,000 per American worker, according to a recent Harvard University Institute of Politics study. This also translates into $53,000 in debt for every man, woman, and child in the country.
However, any time Congress attempts to take a bite out of the bloated budget, an interest group pops up and cries foul. Cutting budgets derived from other people's money is much harder for career politicians than finding new ways to spend that money.
At the moment, there is no plan to curb spending, despite all of the claims about reduced deficits and budgets. The national debt will continue to climb, which means we'll slam into the debt ceiling again in just three months.
But instead of directing his attention to the debt problems, President Obama has already said he wants to focus on immigration reform.
No wonder the Chinese ratings agency downgraded the United States this week.
But that's just the start of the fiscal problems facing this country...
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.
WHAT'S COOKING BUD ?
Obviously, as indicated by the number (lack) of reader comments on this Friday, the topic at hand is not of ANY real interest to most people. I view the budget, debt "ceiling", and government "shutdown" drama as one big circus, albeit a larger distractions to the masses. Consider it part of the Roman Empire's "Bread and Circus" Entertainment Strategy. Consider a new policy (order) by the new FED Consumer Financial Protection Bureau recently:
What's more important is the development that Chase Bank, N.A. just notified customers in a letter mailed to each of its small business account holders (Chase BusinessSelect Checking with Interest and Chase Business Classic Accounts) on Oct 8 that they will no longer be able to send outgoing international wire transfers as of Nov. 17. In addition, they will be limited to $50,000 worth of account activity (deposits, withdrawls, and check and ATM transactions) per month. ( They are now being "protected" by the FEDS).
In addition, HSBC USA just informed its best retail customers (Premier Account Holders) it too will discontinue executing outgoing international wire transfers as of Nov. Other banks are likely to do likewise in the future. Thus, we are now having actual capital controls imposed on Americans to keep all the money (U.S. Dollars) at home. I imagine the end game can not be that far away.
You are right it's circus, like Hollywood, they try to solve problems by throwing money at them. At least, Hollywood more than breaks even on this gamble. The government however, doesn't. Difference is, Hollywood is LOADED with talent, the government is loaded with FBI, real or an acronym (F-ing Brainless Idiots).
Our simpletons are so blinkered they don't see China is well on the track to "detrone" US from status of Global currency. Difference being, what projects China undertakes, they get RESULTS. Our gvmt gets "results" alright, but better not say what kind they are.
Yeah. Thanks, Obama!! For having the Chinese downgrade us because they see that you didn't want to pay our bills and refuse to cut the debt. What?! The Tea Party ran in race after race on the stated goal of shutting down the government, then changed the rules of the House to prevent anyone from calling for a vote to re-open it, then celebrated while it was shut down, increasing our debt by $24 billion? And Obama has been dying to cut Social Security for 3 years, even though the majority of the country is to his Left on the issue and nearly all credible economists think that this is an unproductive and unstimulative way to cut the debt? And the Democrats have agreed to keep the radical Rightwing sequestration spending levels, actually cutting more than Paul Ryan's Draconian 2011 budget did? And Republicans, since taking the House, haven't offered a single serious jobs bill, other than "corporate tax cuts," at a time when corporations are already sitting on 2 trillion dollars but only hiring in China and India? And during the last near debt ceiling default, every mainstream pundit and report cited Republican obstructionism as the source of the downgrade? And the vast majority of the profits since 2008 have gone to the top 1% while Republicans (and many Democrats) continue to protect subsidies to those companies that run nearly as high as the total amount of social welfare we give in this supposedly "bloated" budget? And those same Rightwing politicians coddle and protect the single most bloated department in any government in the world, our gargatuan military? Nah. None of these things can be true. Money Morning assures me that it is the fault of the moocher Left for electing a Socialist. (Whose policies are almost unilaterally to the Right of Reagan.)
I am fiscally conservative and socially a bit more liberal. While on Social Security with a VA disability and Military retirement (none of which are any form of entitlement because I have paid with either money or blood) the wife and I are of limited financial ability to provide for our 3 very young grandchildren. I considered a part time job and landed a school bus drivers position. This opening was not created by Obama, in fact nothing Obama has done has helped this areas economy in a positive way. Opinions of a political nature are deeply held and the majority of folks do not have anything good to say about Obama. I pray numerous times daily for our Country but fear that the biblical prophesy of things and events becoming worse is true.
In Southern Calif. hardly anyone has anything bad to say about Obama or they are simply silent on the subject of politics and government.
OBAMA IS USELESS, JUST LIKE ALL THE REST OF THEM
Mr. Baldwin, A correction I feeal I need to make, regarding the 3 million job openings existing in the US right now. You say the US companes can not find qualified workers to fill these jobs is
wrong. The US educaation system is not falling tho provide workers with skills they need to
compete in the 21st centry global economy. Each year American Universities produce thousends
upon thousends of graduates and none of them can get jobs any wher in th Us. It is the US
government that it is falling its citizens by allowing US companies to hire foregin workers for
much less pay…….