Deal Or No Deal, Pain Is Coming, Political Posturing and Slight of Hand

With just twelve days to go before the so-called debt ceiling deadline of August 2, Barack Obama has flip-flopped on his opposition to a short-term debt limit deal. This latest move comes after the Republican-controlled House passed its Cut-Cap-and-Balance bill Tuesday. Meanwhile, the so-called Gang of Six, three Democrat and three Republican senators, announced Tuesday that they have a new deal, also. However, all of the details are not worked out and it could be weeks before an actual bill could be drafted and voted on.

So, Obama, who has determined that the only way to get reelected is by focusing on his leadership, is now prepared to take a short-term deal while this latest monster is hatched. Obama himself has yet to put anything on the table in writing, which he views as being the proper way to act as a leader. He thinks America wants someone to lead from behind or the side lines. Obama certainly cannot run on his record, since he has failed at everything, especially in handling the economy and unemployment.

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If the government votes to increase our debt limit, even if they double it, we are still teetering on financial collapse. Our problem is not the debt limit, but the debt level itself and excessive government spending (and misappropriation of funds). If the nation does not default, our priority needs to be reducing the scope and cost of federal and state programs. We need to reduce taxes across the board to encourage small business growth. Reducing the tax burden on citizens will spur our economy. 

If warring politicians in Washington are somehow able to join hands in a rousing verse of debt-ceiling kumbaya, Pennsylvanians might be tempted to breathe a collective sigh of relief.

But experts say that even if the government can strike a deal to prevent the nation from defaulting on its debt before the money runs out Tuesday, no one should feel too comfortable. Deal or no deal, pain is coming."No matter what, we're looking at severely reduced spending on the federal level," said Michael Wood, research director at the Pennsylvania Budget and Policy Center. "There's no way that can't affect all of us in some way."

For now, it's unclear who has reason to be most worried, but experts say it's difficult to envision federal spending cuts of more than $1 trillion that don't reduce subsidies to education and programs for senior citizens and low-income people.

Competing plans by House Speaker John Boehner and Senate Majority Leader Harry Reid each claim to cut federal spending by roughly $1 trillion over the next 10 years.

It is most certainly a case of pick your poison, experts say, but most say an actual default would be more damaging. Because the federal government spends more money than it takes in, it borrows money to meet all of its spending obligations. In the past, when its credit limit was reached, Congress simply approved a higher limit, allowing the government to keep borrowing and enabling it to keep paying its debts.

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