GE273 Micro Economics
Project Part 2 and 3: The Debt Ceiling I would like to start by saying thank you that you would take the time to truly listen to your constituents and hear our concerns and ideas about the economy that we live in everyday. The debt ceiling is something that we must take very seriously. It seems that we are constantly raising our credit limit in order to justify our current spending habits. But is that a good idea? If my credit card company keeps raising my credit limit in order to allow me to continue spending more money, but I never pay down my balance, am I ever truly getting out of debt? During a time when I can financially afford to take on a high balance, raising the limit helps me attain the things that I want and/or need during that time. However, raising the limit is not a permanent solution. At a certain point, I may reach a debt level that I can no longer afford to pay back. That is becoming my concern with the current debt crisis. I fear that we are continuing to raise our credit limit but are not adequately paying back the debt we are accumulating. I feel what is needed for our country is the same thing that any normal family would need to do in order to address overspending; address current overspending habits and begin to implement a better savings strategy. These may be the most effective steps to take in order to truly attack the raising debt problem that may plague this country for generations to come. Life in America is filled with wants, needs, desires, and the ability to have them all right now. All we have to do is ask and there will be someone willing to lend us the money to have what we want right now. The only problem is that we are expected to pay that back at some point. For the average American, we have a credit score to determine our debt worthiness. The better the score, the higher the probability that particular individual will pay back the debt. Similar to that, the United States has been given a "credit rating" by Standard & Poor's over the years. That score has always been the highest possible score as the United States government has always been a sure-fire bet for paying a debt. Recently, S&P has downgraded the U.S. government's debt rating. S&P was quoted in "Forbes.com" as saying "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics." (Forbes.com) I believe this is the biggest evidence that our spending and debit management has gotten out of control. The United States needs to get back into a mindset that we can no longer afford to spend more money than we are making. I understand that there are many national programs that all require funding. There are some families in this country that have to make the decision each month on which bill to pay because they cannot afford to pay them all. Our nation is getting dangerously close to this same dilemma. We need to focus on the nation's needs versus the nation's wants. Some programs may have to be put away for now; programs like trying to reach Mars. If the United States cannot afford to provide healthcare to its citizens, yet we can "somehow" afford to spend millions to billions of dollars putting robots on Mars, then I believe there is something very wrong with the priorities of our law makers. I will admit that I am vastly unaware of where the majority of my tax dollars go, but I do know that there are areas that some of my tax dollars are going that I disagree with. If we can put away some of the wants, start to pay for some of the needs (i.e. education, healthcare, social security) and begin to pay off some of our foreign debt, then the United States could be back in a position to again afford some of the wants in a few years. Any financial advisor will tell you that one of the smartest decisions an individual can make is investing in their future; building a sufficient savings that can be used to weather a financial storm. The U.S. government should be no different. The position the U.S. is in currently may not allow for much savings. But what does it take to truly begin saving? A recent Yahoo! Finance article said that "...50 percent of the American workforce spends approximately $1000 a year on coffee..." (www.finance.yahoo.com) Small cuts can make a big difference. Imagine that kind of saving on a large scale. If every government agency cut out one small perk, something not necessary for job function, currently given to its workforce, I would venture to guess that alone could potentially save the U.S. government millions of dollars a year. Those millions of dollars could go into the nation's savings account. Once the U.S. begins to develop a healthy savings account it should begin to diversify its portfolio; begin investing. A small savings account can net the average American a couple hundred dollars over the course of a couple years. However, millions upon millions of dollars compounding interest would yield a much more significant income, thus beginning to build a surplus for the U.S. instead of the current deficit. To attain this, something has to change. The National Inflation Association "doesn't think our nation will survive until 2021 based on the path we are currently on. The U.S. won't be able to continue printing money to monetize the debt and deficits, without seeing an outbreak of massive inflation and perhaps hyperinflation at some point this decade." (U.S. Newswire) Now I believe that this may be a "dooms day" type scenario, but it does illustrate that the underlying point is that the government needs to change the way it handles money or the current situation will get worse. I will admit that there are a lot of things at play that I may not fully understand and maybe my idea to save the U.S. economy may not be the most practical. "[O]utside experts have said..." that a plan like mine "...might mean the government wouldn't be able to afford the FBI, veterans' benefits or other federal services." (The Washington Post) I believe there are other areas that we could cut back on in order to pay down our deficit. The bottom line is that the path we are on is heading in a bad direction and needs to be changed. If we can cut out spending on things that are unnecessary to pay off current debt and begin saving and investing the extra income created, the U.S. will again regain the top-notch credit rating and economy we have all come to know and love.

Works Cited
"American Workers Spend an Average of $3000 a Year on Coffee and Lunch at Work, According to Accounting Principals' Workonomix Survey - Yahoo! Finance." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. N.p., n.d. Web. 15 Feb. 2012. <http://finance.yahoo.com/news/american-workers-spend-average-3000-140000395.html>.

Savitz, Eric. "S&P Downgrades U.S. Debt." Forbes.Com (2011): 33. Business Source Premier. Web. 15 Feb. 2012.
"NIA Projects Multi-Trillion Dollar U.S. Budget Deficits." U.S.Newswire: n/a. Chicago Tribune; ProQuest Newsstand. Feb 18 2011. Web. 15 Feb. 2012 .
Fahrenthold, David A. "Some in GOP See Little Crisis in the Debt-Ceiling Crisis." The Washington Post: A.6. Chicago Tribune; ProQuest Newsstand. Jul 15 2011. Web. 15 Feb. 2012 .