As the Louisiana Legislature fights to find ways to fix the budgetary issues plaguing the Bayou State, representatives in Washington are having to deal with fiscal issues of their own.
The difference being: the ladies and gentleman in D.C. can elect to borrow large sums of money to fill gaps, leverage states do not have. Congress puts a cap on the amount the country can borrow, which is loosely based around revenue and recommendations from the U.S. Department of the Treasury.
Most would call the number arbitrary, at best.
The “Debt Ceiling,” as its become known, was hit on March 16 of this year, and the D.C. electorate has until April 28 to decide whether or not to raise the ceiling, make cuts, or initiate a government shutdown for a set period of time.
Since March 1962 - apparently the Ides of March, and dismal first quarters, don’t just affect small business - the debt ceiling has been raised 74 times. President Ronald Reagan leads the way with 18 ceiling raises, followed by Presidents Clinton, George W. Bush, and Obama with eight, seven, and five times respectively.
Clinton actually experienced a government shutdown in the mid-1990s for 27 days between November 1995, going into January 1996.
The big question is: Why?
Congress is responsible for keeping the government fiscally responsible as part of the checks-and-balances system. However, finding bi-partisan - or, indeed, even a partisan vote - to cut services and revenue is difficult as it usually becomes a hard sell at home.
That makes little difference, anyway, because if you can find a politician who can’t - or won’t - find a way to spend a dollar, you’re looking at a lazy politician.
But, the debt ceiling has been raised in the past to continue to fund U.S. Treasury bonds - basically, debt to fund debt.
A default on U.S. Treasury bonds has led, in the past, to increased interest rates on the previous monies borrowed by the country. Imagine defaulting on a car, and the mortgage company then increasing your interest rate. Those increases have led to their own budgetary issues, as the cost to fund that debt increased by the hundreds of millions, per year.
A cost that is, more often than not, passed along to the consumer through various means - usually ending in a recession or short-term market crisis.
Interestingly enough, Trump has apparently dropped the dog-and-pony show regarding “America First” in favor of more international relationships - most recently his wheeling and dealing with China.
Which is smart - China has become one of the main funding options for the U.S.
Those deals are all part of the Trump persona, as the Donald stated during his campaign that he “loved debt” and “was the king of debt.”
“I would borrow, knowing that if the economy crashed, you could make a deal. And if the economy was good, it was good. So therefore, you can’t lose,” he said.
So, it should come as no surprise that Trump is pushing to raise the debt ceiling, but - like all good politicians - the Donald is looking to avoid cuts and, instead, focus on re-appropriation.
Basically, making cuts to certain government functions and finding new places for the dollars to go.
In this particular, current case, the choices are limited to government shutdown or increasing the debt ceiling. Sadly, the result has moved into the political arena. Democrats are not happy with the idea of Trump and the GOP taking funds from other parts of the government to use for their own agenda, while at the same time raising the ceiling.
Trump and the GOP, on the other hand, are willing to risk a government shutdown to get their way - as the aforementioned cuts to certain departments were coming, anyway.
In the end, the “debt ceiling” is remarkably ineffective at containing government spending - usually it ends up being a political weapon.
Conversely, raising the debt ceiling and using borrowed money to fund current debt payments is a recipe for disaster.
It’s so bad that there is a whole sect of “self-help” type references to help consumers stop this destructive pattern.
And yet, it never once bit the current Commander-in-Chief during his business dealings, as he could always utilize his leverage to make a deal with the lender - or simply declare bankruptcy.
While leverage and a deal aren’t out of the picture, its a lot harder to deal with several countries who have lended the U.S. money, as opposed to one insitution.
And bankruptcy is not an option.
But with D.C. being the way it is, and politicians spending the way they do, chances are the Democrats will lose, the ceiling will raise, and the U.S.’s debt level will follow Elon Musk to Mars.