As Debt Ceiling Deadline Approaches, Y2K Memories Come Flooding Back

COMMENTARY | "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford"

The country has reached its limit. We have known for months now that something had to be done; this deadline did not sneak up on the country. According to the Department of the Treasury, the debt ceiling was officially reached in May.

This does not mean that no new revenue is coming in; it only means that the U.S. government cannot legally borrow any more money. Based on the 2012 budget, the government will have an annual income of $2.6 trillion.

Y2K Replay

Granted, this is less than the money the government is projected to spend, but the scenarios being tossed around smack of Y2K: the government shutdown, halting Social Security checks, food stamps, federal worker and military paychecks as well as government contractor bills and payments to Medicare and Medicaid providers. They might as well throw canceling Christmas into the mix.

The citizens who rely on the government for their income are being threatened when, in fact, cutting expenses could have started back when officials knew the debt ceiling was approaching. Waiting till the last possible moment to make a move has done nothing for our elected officials except possibly let them live in a bubble a little while longer. The uncertainty swirling around the country is doing more harm than any decision Congress decides to make regarding this issue.

Hoarders are us

They could, of course, raise the debt ceiling, sort of like renting yet another storage building because your home is packed to the gills, hoarder style. For the short term, until all the mess gets sorted out, it could work. But only if the mess is actually looked at and cleaned up. Shoving junk out of sight and out of mind is not the way to handle the economy of a major world power. Speaking of major world power, defaulting on international bonds threatens the dollar's credibility as a stable currency.

Citizens will feel the pain

There are serious implications either way the government decides to go. Higher taxes are often used as a way for the government to "earn" more money. Families will be less inclined to spend, and many will be unable to save or invest. Ultimately this hurts our country's economy. When consumers are not consuming, business falters, people are laid off and so the downward spiral continues. With inflation also playing a role in this scenario, the American public is held hostage to their basic living essentials.

Every area the government has its hands in is at stake, according to CNN Money: education; health care, especially Medicare and Medicaid; and Social Security. The clock is ticking on these programs as it is. We may be considered a strong country, but at what cost? How is hurting our weakest citizens the answer? The disabled, sick and elderly are set to lose the most while politicians decide who and what is most important.

"The few who understand the system, will either be so interested from it's profits or so dependent on it's favors, that there will be no opposition from that class." -- Mayer Amschel Bauer Rothschild, "the founding father of international business" and seventh on Forbes magazine's list of "Twenty Most Influential Businessmen of All Time"

With less than a week before a decision must be made, my prediction is that the government will sidestep default. The debt ceiling will be raised. The country will suffer through a period of higher taxes and inflation. But the government will not default on bonds. The stakes are too high and politicians' jobs are on the line, including President Obama's in light of the upcoming election.