This week, President Obama urged Congress to compromise on the so-called debt ceiling, the legal ceiling for federal debt, and to agree to a new budget that would balance America’s books. Political pundits and politicians have prophesied that any prolonged bipartisan stalemate would plunge the United States into a new economic crisis. It appears that the “Gang of Six” in Congress, made up of top lawmakers from both sides of the island, has finally agreed to move forward with talks to cut nearly $3.7 trillion in federal spending over the next 10 years. While it is unclear from which programs and jurisdictions this money will come, it is clear that reaching a final version of any compromises and subsequent bills, in the bipartisan House and Senate, will be long and harrowing.
Credit card bills become a headache for everyone
Much of America will be relieved that the US government is not going to shut down as it threatened many times earlier this spring. Some will remember the thousands of government employees furloughed because lawmakers couldn’t reach an agreement on the federal budget.
Obviously, even the most powerful people in the country struggle to control spending and credit.
These temporary lapses in government underscore the availability, or lack thereof, of new credit and new credit alternatives. US legislators are effectively involved in what many credit card customers would recognize as a credit card negotiation.
Like all credit card consumers with revolving debt, many legislators are first experiencing the anxiety and pressure that comes when creditors call and you can’t pay; in this case, non-payment could mean years of political backlash from angry voters. What’s worse, a federal-sized “credit card deal” gone awry could undermine the fragile but recovering international economy.
Unlike the Eurozone
Over the past year, the US, despite opinions and forecasts to the contrary, has resisted rough economic forecasts with unabashed conviction. Much of the Eurozone, in countries like Italy, Spain and Greece, has suffered a crippling series of severe economic shocks equivalent to nation-size bankruptcy. Not infrequently, financial earthquakes have punished the Eurozone and have brought it to the brink of the abyss. International creditor and banking confidence has been shaken by high unemployment in key euro zone 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 have not fallen on similar hard times. Historically, however, there has always been a big difference in the perspective of American and European consumers: American confidence generally trumps difficulties. That seems to continue to resonate in a bipartisan Congress this week: Americans are advancing.
