Yesterday a letter was released and signed by 150 prominent economists stating starkly and simply:
A DEBT LIMIT INCREASE WITHOUT SIGNIFICANT SPENDING CUTS & BUDGET REFORMS WILL DESTROY AMERICAN JOBS
An increase in the national debt limit that is not accompanied by significant spending cuts and budget reforms to address our government’s spending addiction will harm private-sector job creation in America. It is critical that any debt limit legislation enacted by Congress include spending cuts and reforms that are greater than the accompanying increase in debt authority being granted to the president. We will not succeed in balancing the federal budget and overcoming the challenges of our debt until we succeed in committing ourselves to government policies that allow our economy to grow. An increase in the national debt limit that is not accompanied by significant spending cuts and budget reforms would harm private-sector job growth and represent a tremendous setback in the effort to deal with our national debt.
Well, as much as the optimist that I am, I wish these measures would not be so dire and feasibly drastic, but unfortunately I must agree entirely and would go so far as to say this can’t be an ideal or wishful thinking, it must happen.
With just preliminary numbers on the private job sector yesterday, the Dow Jones Industrial Average, NASDAQ Composite and S&P 500 all dropped over 2 percent. Words like “sluggish” and sharp declines in car sales and manufacturing only add to the market anxiety. The icing on the cake was the late afternoon announcement that Greece’s bond rating was to be lowered once again due to their intense economic strains due to having too much debt. Pessimism is taking hold with the uncertainty of our Government’s Debt now past it’s threshold and a budget that is busting through the seams. We need a voice of reason, a sound and rational economic future for sustaining and growing our economy by curbing our addiction to credit.
Roll Call reported last night on John Boehner’s perspective that this is imperative to take action sooner rather than wait until the so-called August deadline. :
“I suggested to the president this morning the sooner we deal with this, the better. The president agreed,” he said.
Boehner ominously warned that if Congress and the administration do not come to a solution, “the markets may do it for us.”
Let us hope that yesterday’s 2 percent market decline was enough of a warning to force an intelligent and constructive debate that will ultimately help to contain, control our short-term debt problems as well as bring positive measures to curbing our budget to allow for a future without these same sustainability issues arising.