America's Debt Crisis.

In the United States Democrats and Republicans are still trying to reach an agreement to raise the nations debt ceiling in order to allow the government to pay it's bills and avoid defaulting on it's national debt. Within the business a lot of people not only think that this is a huge bluff designed to raise the tension before a last minute deal is dramatically announced they've also started openly saying so.

I hope that is the case because if a deal is not reached the best case scenario is that America will have to default on part of it's debt and lose it's triple A credit rating. This will drive up the cost of borrowing across the economy from government bonds down to mortgages and small business loans. As a result America's economic recovery will be slowed dramatically extending the current slump for the next 5-10 years. The worst case scenario is that America has to default on all it's debt causing the global economy to implode like it did in 2008 meaning that it's time for Americans to start stocking up on canned goods and shotgun shells.

Obviously if Obama wants me to fix the entire thing for him I'm at least going to need some sort of hand held device so I can actually read the proposals on the table. However from the reporting of the proposals I have read it's clear that America needs to raise it's debt ceiling for at least another year. This extra borrowing needs to be off-set by a package of spending cuts and tax increases with $3 of spending cut for every $1 raised through tax. That means the Democrats will have to accept the cuts to Medicaid/care that the Republicans want. It also means that the Republicans will have to accept the end to the Bush tax cuts and other loopholes that the Democrats want because those tax loopholes will not affect the average American no matter how big their ego is.

The important thing though is that a deal is done because a debt default is something that will bring down the whole country rather then the President. This is something the Tea Party will learn once they've had the opportunity to gain some experience. As for bringing down the President I'm actually beginning to think that might be a good idea because the fact everyone's still talking about Medicaid/care after Obama spent his first year in office on health care reform proves that he's still not quite up to the job.