Beyond the Downgrade and the Debt Limit Debate

Beyond the Debt Limit Debate

Rep. Gabrielle Giffords' surprise appearance to the chamber, for the first time since being shot in the head in January, demonstrates a point beyond the vote for raising or limiting the debt ceiling. It also represents the amount of sacrifice and compromise required to serve the needs of millions of students, seniors and unemployed workers whose livelihoods should be the top priority for all public officials in this time of crisis.

Karamargin, Gabrielle Giffords’ communications director said that as Giffords watched Republicans, members of the Tea Party and Democrats debate about the debt ceiling, "She turned to her husband, Mark, and shook her head and said, 'Just get it done.'" As she headed to the House floor to cast her vote on Monday, a new message appeared on Giffords' Twitter account: "The Capitol looks beautiful and I am honored to be at work tonight." Her courageous appearance was an emotional scene, as Giffords' colleagues cheered for her warmly and loudly, with many rushing to her side to welcome her back. She sincerely served her constituents and sacrificed her life. Even after being shot in her home state, she returned to do her best to serve her country.

Though it is significant to reach an agreement about the debt ceiling, the root problems of the crisis must be addressed in order to reach a sustainable solution. If the debt limit is not raised, the government can no longer borrow funds, and federal operations may continue for the period that the Treasury is able to use existing revenue and secure additional resources through special measures. This means that most employees will continue to be paid - at least in the short term. Nevertheless, the Treasury's ongoing inability to borrow further capital and finance its deficit will eventually lead to a default, if significant revenue increases or spending decreases are not instituted. On the other hand, raising the debt ceiling will also probably relieve the economic tension for possibly six months. However, the potentially negative consequences of a debt-limit debacle are much greater and far-reaching than that of a shutdown. This is because the risk of a government default would jeopardize the credibility of the United States government. As David Murrin, chief investment officer at Emergent Asset Management told CNBC on Monday, "It's incredibly frustrating to watch this slow train wreck taking place. All we have are incremental solutions to the problem and that's no good anymore. You need some very drastic solutions to shift America out of its paradigm because it's being chased by a hugely powerful China," Murrin said in an interview.

Various solutions introduced by both parties, policy makers, and other independent scholars are the following: simply tax the wealthy and corporations at 1960 levels, increase corporate tax levels, reverse tax breaks for the ultra-rich, regulate corporate debt and speculative lending, reduce measures that must include both spending cuts such as a reduction in military expenditure, and cut domestic programs including Social Security, Medicare and Medicaid, education, environmental protections, public transportation, and food safety. Beyond these debates, there is an increased need for compromise and more bipartisan campaigns to address these issues.