As I write this, legislators just approved an increase to the country’s debt limit to the highest level ever. The vote raised the cap on federal borrowing to $14.3 trillion. Does anyone not know why this was done? Although I’m not an economist and this topic isn’t metallurgical, understanding what’s happening and trying to change it may help avoid a future economic crisis in our country, our companies and our homes.

We want the economy to improve and with it our businesses. Our concern is that if we allow government to spend at an unchecked rate, we could end up with a second economic dip or worse. Need I remind you that they are spending our money? Let’s make sure they are being responsible with it.

Just proposed is the administration’s 2011 budget of $3.83 trillion. This budget anticipates a record deficit of $1.56 trillion, hence the need for the debt ceiling to be raised. Did you know that government spending was up 5.7% in 2010 over 2009 and will be 3% higher than that in 2011? The administration envisions its proposals adding at least $8.5 trillion to the national debt over the next decade. The increase in debt over the next year amounts to $15,000 for every American household. This equates to about $4.5 billion every day or over $180,000,000 of new debt every 60 minutes!

The final deficit numbers for 2009 were nearly 10% of GDP, which is larger than any year since 1945. Even at today’s low interest rates, the Fed spent $195 billion on interest alone in 2009. This is 10 times the amount of the entire NASA budget! It took 40% of the individual income-tax payments to make this payment. That means taxpayer dollars that could have gone to paying off debt had to be used to pay interest to finance the debt.

Our government has four viable means of dealing with this debt. The first is to cut spending. Second is to raise taxes. Third is a combination of the first two, and the fourth is to monetize the debt by printing more money. This option devalues the dollar, resulting in increasing inflation. This helps the government by creating money to pay the debt and also making the current obligations (in dollars) easier to pay back because the dollars are worth less relative to other world currencies. If this happens, however, we are likely to be saddled with higher taxes – personal and corporate (especially small business) – in addition to inflation, which causes goods and services to cost more.

I could probably go on and on with the economics lesson, but I think you get the drift. What needs to be done to prevent our economy from taking one step forward and two steps back? What would you do if you found yourself in a mess like this? You would spend less than you took in and use the excess to pay down the debt. Bottom line is that we need to stop spending more and more.

In my opinion, our situation is bad enough that it would be irresponsible to vote for any politician that agrees to increase this debt. Make an effort to learn who votes to increase our debt – Republican or Democrat – and vote them out of office. The ultimate solution to this problem may be to replace the people who have spent our way into this mess. IH