While trying to “save” our economic situation from certain ruin, the housing relief bill passed over the weekend may make things worse for the economy. Yes, there are government bailouts of Fannie Mae and Freddie Mac. Yes, taxpayers are on the hook for looser underwriting standards for the 400,000 (out of an estimated more than 2 million) foreclosures that this bill is likely to help. But that’s not what is most worrying for some.
For some, the fact that the housing relief bill also raises the national debt ceiling to $10.6 trillion is one of the most troubling aspects of this housing relief bill. Wisebread offers this assessment of the latest authorization for our government to borrow more money:
This increase brings the debt ceiling to $10.6 trillion, and that is
equivalent to about 75% of America’s gross domestic product. This will
probably devalue the dollar as America becomes a more risky place for
Having a national debt ceiling is no more than a ploy to make us think that the government is borrowing responsibly. However, as this latest bill proves, Congress feels no compunctions with regard to increasing our national debt. Just as government spending is being allowed to run rampant, government borrowing to pay for it is equally unfettered.
It is an interesting reflection of American consumers and their debt. At some point, as America loses its place as an economic powerhouse, our creditors will finally say “no more.” Our credit line will actually be limited (but not by us), and we will have to truly face paying back our debts with interest. And, like many individual Americans are finding right now, such debt can be crippling.
What do you think of our increasing national debt?