When the average American used to run into a credit card limit, there were two choices: The person could choose to cut up the credit card and pay off the debt, or the credit card company could simply raise the card's limit, giving the consumer more borrowing power. Bankruptcy didn't have to be the result, especially if the person woke up and recognized that endless spending means endless debt payments.
But the borrowing power of average Americans wasn't unlimited and the Great Recession proved that borrowing, be it for houses, cars or profligate credit-card living, isnt an endless party.
That lesson was driven home to the average American, but not, apparently, to large parts of its government.
Aug. 2 is the date Treasury Secretary Timothy Geithner says he won't be able to continue moving money around and still cover all the nation's spending and its debt obligations.
Alarmist political rhetoric has been sounded on both sides for weeks, growing in heat and intensity while burying reality, which lies somewhere between the liberal Democrat "don't cut any programs and raise taxes" argument and the conservative Republican "cut almost anything and raise no revenue" argument.
Reality is anything from simply prioritizing what the nation truly needs to keep funding in addition to meeting its debt obligations to a constitutional crisis. Neither necessarily means default, ruin and destruction.
Reality is that the federal government will still be collecting taxes from us, just not enough to go on spending the way it has. That means it's time for change, and change isnt rhetorical. It's real, it's fiscal and it's serious if we wish to avoid the default the alarmists on both sides say must occur. We say it's not inevitable, even if the debt ceiling isn't raised.
For far too long, Americans have turned to government for far too many solutions that weren't originally intended. We depend on government for more than just a strong national defense and international relations. We're into education, power, environment, transportation, labor regulation, commerce, health care and many other programs funded through federal coffers - which are filled with our money as taxpayers. Many of those could be reduced, cut or eliminated without much effect except bureaucratic unemployment.
For far too long, we've decried government spending as out of control while refusing to allow anything to be cut from a program that was our personal favorite. The result is a rancorous, yet do-nothing Congress split between big spenders and big cutters, and a president who spends years pandering to the two sides, either as a tax-raising liberal who promises program reductions that can't move through a Congress intent on keeping people happy back home, or a tax-cutting conservative who still has to deal with a big-spending intent in Congress.
The debt ceiling issue has been tied to deficit reduction and spending cuts, but that's the smoke and mirrors. Reality is that if you've got too little coming in, you spend less and pay off what you borrowed. It's your word, your bond. Period.
For most of us, when we hit our personal debt ceilings, we dont have the opportunity to raise more revenue, unless we manage to find another job. For the federal government, the only way it can commit to spending more is to reach into the economically thin pockets of working Americans, those who either own businesses they've worked hard to keep going, or those who struggle to keep jobs at those businesses in the still shaky economy.
It's time to recognize the credit card needs to be cut, the revenue that still comes in must go toward debt repayment and virtually anything else is on the table of prioritization.