Congress members, get realistic. Decide urgently with maturity

An open letter to Respected Congress members

We have been witnessing the Republican and Democratic parties posturing, politicking, wasting time and spending tax payer's money when at the same time taking us to the brink of disastrous consequences of their tragic performance over the past few weeks. Worse still, a fear is spread that the US going to default on its obligations, bills will not be paid after 2^nd Aug and our government will be bankrupt. Unfortunately it is partly true and rating agencies like Moody's and S&P have also given notice that they are considering to downgrade US’s rating. All this stage show is because the GOP who controls the House refuses to agree to raise debt ceiling without getting something from democrats in return as concessions for us!

Given that this is being done in good faith for the good of the country. But only a small number of the citizens understand what this commotion is about. Debt ceiling is a non-issue; it is fixed and changed whenever needed by the congress. Presently it needs to be raised because we have reached its limit fixed sometime ago by congress itself. Since 2001 the debt ceiling was raised ten times; was there such a drama even once? Truth is that no one explains why we have gotten into such a huge debt? Let us try and do that.

I agree it will be terrible if the ceiling is not raised, not because the world will come to an end, but because we will surely lose the confidence of the world in our abilities to come together and make important decisions. This may result in unpredictable results, which in turn may be too bad particularly in the weak economy, because the monetary and stock markets react unfavorably to uncertainty. As said above, debt limit is set by congress; they can and will raise it (few days are left anyway, within which congress WILL raise it). It is an internal matter for congress and it should be done as a matter of normal course of business.  

Issue of raising the Debt ceiling is made into an absolute comedy, which if these politicians do not conclude quickly, may turn tragic. Larger issues that created this are as follows:

·       It is a fact that we are spendthrifts and not fiscally disciplined for past many years.

·       We do not have enough revenues to meet our expenses, which needs to be increased.

·       Some spending are musts; like the Social Security, Medicare, Security measures etc. But many unnecessary expenses must be cut down. A lot of obligation to police the world that the US has taken on must be shrugged off because it is very expensive for US taxpayers.  

·       GOP is totally against increasing taxes, so how do we increase revenue? This position is not acceptable.

·       “Earned” entitlements of elderly and veterans must be respected but a future strategy must be chalked out to meet new necessary obligations.

Only during last few days they have started listening to voices more forcefully that WE NEED TO REDUCE SPENDING AND AT THE SAME TIME INCREASE THE REVENUE. This very obvious solution was only being talked about in fragments. This is our only salvation to be able to reduce the deficit every year. Large debt that we have created equals to almost our one year's revenue and causing doubts on our credibility and our casting fears about our solvency.

First off, let me say that I am convinced that we will not default. Our leaders may be acting childish or even irresponsible, but they are not foolish to let that happen. I am surprised that our responsible representatives in congress are not taking the citizens into confidence and tell them in plain language the real serious story and measures needed to rectify the problems.

Let me elaborate. Our government collects revenue mainly from taxes. That money is spent on all sorts of projects for the benefit of Americans. These projects include all the welfare projects, entitlement programs, infrastructure projects, national security matters, space programs etc. We must also keep in mind that there are other several realities happening simultaneously.  They are as follows:

Our aging population is increasing

Our overall population is increasing

Our needs are increasing

Things are getting more expensive as we go by

Our income tax rate was almost 90% after the WWII, is less than 40% today

Our expenses have gone up with years

Keeping in mind above facts, net effect is that our spending is more than our revenue. Hence we are in deficit every year for many years. This deficit is gradually increasing. Deficit is met with by borrowings in the shape of printing money by Feds and giving it to lenders in the form of bonds with a promise that it will be paid back with agreed interest at a point in time in future. Some borrowing is internal from other trust funds.

Hence as mentioned earlier we must tighten up our belts for as long as necessary, take hard decisions, live in simplicity, and ensure that we reduce our debt substantially and not only have the balanced budget but have surplus to be able to pay the past debt.

We must ask our representatives in congress to stop wasting their time. They must come to a compromise resolution to do this in the national interest. We must keep a few simple objectives in front of us. We should ensure that we do not reduce the entitlement payments. No one should stay below poverty line. People in middle class must be able to afford an acceptable standard of living doing a respectable job. Large corporations (which are owned by Americans anyway) must pay higher taxes, because as a nation we all have a responsibility to look after each other. Let us do that. 

If Congress does this quickly, they will save themselves from deterioration of confidence of public in them, their own health by changing into healthy and realistic life style and alleviate worries of Americans, making them also more at peace.