This week, President Obama urged congress to reach a compromise on the so-called debt ceiling-the legal ceiling for federal debt-and agree on a new budget that would balance America’s books. Policy wonks and politicos have prophesized that any prolonged, bipartisan stalemate would plunge America into economic turmoil anew. It seems the congressional “Gang of Six, “composed of the top lawmakers on either side of the isle, has finally agreed to move forward with talks to cut nearly 3.7 trillion dollars in federal spending over the next 10 years. Though it is unclear from what programs and jurisdictions this money will come, it is clear that reaching a final version any compromise and subsequent bill, in the bipartisan House and Senate, will be long and anguished.
Credit card bills become a headache for everyone
Much of America will be relieved that the US government isn’t going to shutdown as it threatened many times earlier this spring. Some might recall the thousands of government employees furloughed because lawmakers couldn’t reach an agreement over the federal budget.
Evidently, even the most powerful people in the country are struggling to reign in spending and control their credit.
These temporary lapses in government underscore the availability, or lack thereof, of new credit and new credit alternatives. US lawmakers are effectively engaged in what many credit card customers would recognize as a credit card negotiation.
Like all credit card consumers with revolving debt, many lawmakers are getting their first significant taste of the anxiety and pressure that comes when creditors call and you can’t pay up-in this case, failure to pay up could mean years of political backlash from angry voters. What’s worse, a federally sized “credit card negotiation” gone wrong could undermine the frail but recovering international economy.
Unlike the Eurozone
Over the past year, the US, despite opinions and forecasts to the contrary, has weathered rough economic forecasts with brassy conviction. Much of the Eurozone, in countries like Italy, Spain and Greece, has suffered a paralyzing series of severe economic shocks equivalent to nation-sized bankruptcy. Not a few times have financial earthquakes punished the Eurozone and pushed it to the brink. International creditor and banking confidence has been rattled by high unemployment in pivotal Eurozone countries and the reduction of hundreds of billions of dollars of European consumer debt to “junk” status.
Of course, no one can argue that the United States and the Eurozone haven’t fallen upon similar hard times. Historically, however, there has always been a major difference in the outlook of American consumers and Europeans-American confidence usually prevails over hardship. That appears to still resonate with a bipartisan Congress this week: Americans move forward.