To discuss the current economic debate in this country may be seen as beyond the scope of a local financial writer. But, as Speaker Tip O'Neill wisely said, "All politics is local." That would, in my view, include all political debate about economics.
As we witness the inability of Congress to agree upon whether to raise the debt ceiling, the failure of which would, by estimates of The Economist, be approximately $86 billion, one wonders why our representatives would play Russian roulette with the financial good name of our country. In order to answer that question, we need only look in our own back yard.
I wrote recently about the fact that the Superintendent of Portland Public Schools, despite an unemployment rate of almost 9% and the worst recession since the Great Depression, said that it was her goal "to persuade voters to approve new construction until all the schools have received the overhauls the district says they need." She did not say that she would pull in her belt and approve what they truly needed, but issued a rubber stamp for everything that she thought they needed. It was as if she were living in different economic times than the rest of us.
On the day the City of Portland budget was adopted, I pointed out that 36% of our budget was spent to achieve equity for 14% of our citizens. Despite a dismal record of actually having improved the situation for the disenfranchised segment of our population, the budget allotted more money and added further layers of government to an already cumbersome and inefficient system, as its citizens struggle with a depressed housing and employment market. To justify these additional expenditures, the city relied on a study that concluded that fully 2/3 of our minority population experiences discrimination when looking for a place to rent, in spite of the fact that not one one of our city officials had read, or had access to the data, on which the decision to approve city housing appropriations was made.
When we tolerate such inept management of our local resources, why would we be surprised that national politians would behave differently? The lack of outrage expressed to those who caution against the potentially disasterous effect that failure to pay our bills would have upon our citizens, our services and those who lend us the money we spend, is consistent with the way we respond to our local politicans. Who is it among us that does not understand that, if we threaten not to repay our loan, our lenders will want to charge us more in the future?
The consequences of such unprecedented action will not be confined to Washington D.C. The cost of borrowing money, for everyone from the US Treasury to a small business that is trying to expand and hire new workers, will go up immediately. Those rising costs will damage employment, which is already tenuously improving after years of outsourcing and downsizing.
The question we should be asking ourselves is at what point did we find ourselves so entrenched in our ideologies that we cannot compromise? Does anyone except those who represent us really think that, in order to get out of debt, we must NOT cut expenses and raise taxes?
The people I know who are in debt certainly are trying to increase their income and cut their expenses. Why is this so difficult for those whom we elect to understand?
And, more importantly, why are we not telling them exactly how we feel about their reckless behavior?