Canadian Columnists' Debt Intervention

Friends don't let friends drive off a cliff in a debt-laden car while all the passengers argue whether to turn left or right.

The debt-ceiling mud-sling..., erm, negotiations carrying on in the U.S. are less than a week away from the Aug. 2 deadline that could lead to the country defaulting on its debt. Needless to say, that's not great news, but Lorne Gunter of the National Post reminds us that there will still be plenty of lenders around the world more than willing to front the U.S. with enough money to keep paying its civil servants and what not, were it not for the “artificial debt ceiling.” Compared to Greece, which truly had run out of people and institutions willing to invest in it before getting a handout from the EU, “all that is preventing the United States from borrowing the cash it needs to meet its spending commitments after Aug. 2 is the legislative cap on federal debt that has existed since 1917,” says Gunter. So it's kind of like stubbing your toe on a table that you built and placed, except that the results are “credit downgrade” and a possible return to recession and not just profanity.

Heather Mallick of the Toronto Star asserts that “the debt ceiling is not a pebble in a pond, it’s a boulder in a puddle and it will splash you and me,” as she berates the ideological paralysis that has ensnared the Beltway. “If you cleave to a single belief, either left-wing or right-wing, and ignore the manifold — the huge agglomeration of elements in a complicated world that surrounds you — you will a) be excoriated, which you enjoy, and b) destroy your nation,” writes Mallick, more or less correctly. But then she goes and spoils it all by saying something stupid such as “like Anders Breivik, you won’t care because you stuck to your ideology and did your thing.” Which is taking her argument just a little too far, even if she's right in pinning much of the blame on systemic issues stemming from trillions spent on unwinnable wars under a certain presidential predecessor and a political system that looks more and more like kindergarten each day.

Glen Hodgson and Kip Beckman of the Conference Board of Canada take to the Financial Post to suggest that the U.S. introduce a nationwide sales tax much like our GST, as “it provides stable revenues, it affects almost all of the population, and it has the least impact on business investment.” It's a dead simple solution to taking a big chunk out of the country's $14.3-trillion debt, but Hodgson and Beckman don't expect it take hold in Congress or the White House any time soon. Doing so would be political suicide in an environment that holds low taxes sacrosanct, which further bolsters Mallick's point, but if our neighbours to the south aren't willing to talk about taxes like adults, it falls to their best friends to do it for them.