The debt ceiling discussion as a household family meeting

Friday, Standard & Poor’s downgraded the rating on the United States of America from AAA to AA+. Regardless of how you spin this or what you believe in the reputation of S&P’s ratings in light of their performance during the housing bubble with their ratings on the derivatives, the fact is that the markets depend on the ratings for investment decisions and it will matter. Let’s not dance around that fact.

But that is all for the media and politicians to argue about. We’re going to examine this in a slightly more pedestrian way.

It seems like the GOP loves to talk about the US economy in terms of a household. To keep in step with that metaphor, let’s peek in on the secret tapes of a family meeting that just adjourned at one of my neighbors down the street.

Dad: Ok, is everyone here? Mom, kids? The mortgage loan officer and credit card card companies? ….. do you want more tea?

Mom: Can we just get on with this meeting? I have a blog to write….

Dad: Ok, ok. As you know, 42% of our budget is dedicated to the mortgage. Since we’re cutting spending, we’re going to quit paying that. We might just send in the interest payment but we’re gonna have to crunch those numbers. And we’re going to further devalue the collateral value of our house by not repairing that gaping hole in the roof or patch the driveway. We’re probably not going to pay the credit cards, though.

And we’re spending far too much in food, so we’re cutting way back on everything….

Kids: But daaaaaaddddddd….

Dad: Hey, we have to cut the spending. The malnutrition that will set in may affect your ability to learn in school and I may get weak and fall down on the assembly line, but we have to cut that spending.

We’re also cutting off our medical insurance so if anyone catches anything, you’re just gonna have to ride out the symptoms. If it kills you, well, you just should have had stronger genes. Cable and telephone is going, to…

Mom: But what about emergencies? We’ll have no way to know if a tornado is coming or have 911 to call…

Dad: That is all in God’s hand now. If God wants us to survive a natural disaster, His hand will move us out of harm’s way.

…….

And the mortgage officer goes back to the bank and immediately draws up papers to call in the mortgage and the credit card companies cut the credit limit and raises the interest rate on the existing balances and any future spending.

Are we surprised that Standard & Poor’s lowered our credit rating in light of the people who claim to be the most responsible members of Congress were publicly debating whether or not the United States should pay its bills? That the GOP front-runner for the presidency publicly claimed to support default as a viable action? That the president who has been widely regarded as being able to win re-election in 2012 is now being reported by the media as having a plummeting approval rating and this challenger could win?

If you were a creditor of the United States, would you sit by and wait to see what happens?

Yeah, me neither.

The debt the next generation will be paying was not started by our government, but by ourselves

Alice Paul c. 1930s

In her article in the WSJ, Peggy Noonan uses an example that has been kinda turning over in my head ever since I read it early yesterday morning. In it, she quotes Rep. Marsha Blackburn of Tennessee that many in the Tea Party crowd are grandmothers and that:

“Women are always focusing on a generation or two down the road. Women make the education and health-care decisions for their families, for their kids, their spouse, their parents. And so they have become more politically involved. They are worried about will people have enough money, how are they going to pay the bills, the tuition, get the kids through school and college.”

Ms. Blackburn suggested, further in the conversation, that government’s reach into the personal lives of families, including new health-care rules and the prospect of higher taxes, plus the rise in public information on how Washington works and what it does, had prompted mothers to rebel.

And that really got me thinking about who these “grandmothers” and women are, the timeline of their lives and the unintended consequences of history.

These women — who are older and are now “livid,” concerned and intuitive — were most likely responsible for inadvertently starting the ball rolling toward our ever-increasing crushing debt load by supporting the most politically and socially active woman’s issue of the time; the Equal Rights Amendment.

Now before you all start in on me for beating up on grandma, just hang with me for a moment. Growing up Catholic and as a kid of a mother forced to go to work second shift to afford us, my formative years were spent at ground zero of this issue. One thing that came out of the ERA was that women were an emerging force in the employment scene. With the political and cultural tides turning the way of equal pay for equal work and looking like the ERA was going to be ratified, companies slowly, reluctantly began paying women more and promoting in an effort to ward off legislation. Women were also becoming more educated and getting better jobs. The country was getting used to the dual income. And that flush of cash was too tempting for corporate America not to scheme a grab.

And grab they did. From 1964-1980, the average house price went up from $13,050 to $68,700 while average income went from $6,000 to $19,500 per person. That calculates to 217% of annual income for a house in 1964 v 352% annual income in 1980. In addition, a car which cost an average of $3,500 in 1964 now cost $7,200 in 1980. In 1964 when most families were single income, they only needed one car. In 1980 when the dual income family had firmly taken root, a second car was necessary. So was out-of-the-home day care. Women had fought the right* to be equal in the workplace, but so too had this fight created a dependence on a dual income for a typical family to afford a home to live in. Women could no longer leave the employment world at will and their men could no longer afford them to.

Life got too expensive to maintain and none of this was due to the Federal government meddling with significant entitlement programs (except Medicare, which every senior in the Tea Party loves and would kill any candidate who takes it away.)

But we really didn’t learn that large social shifts will always be taken advantage of by our free market economy and corporations incessantly hungry for more profit. In this last decade before the Recession, universities were watching the housing market climb up and up and jumped into the fray with their version of the cash grab. They raised their tuitions, knowing full well the middle class would dip into their easy home equity to pay for Johnny and Suzie’s education, regardless of cost. Now, their grandkids are saddled with large bundles of debt nobody is willing to forgive.

And men are losing their jobs at record rates, reducing the dual income family to a minority. And I was left wondering, “Were the grandmothers in Ms. Noonan’s article the same women who foresaw the staggering and unsustainable private debt we are now faced with as they marched for women’s rights back in the early ’70s?” All these women wanted was the right to be treated equally and have the right to do the same job as a man so they could have a higher quality of life. Unfortunately, all corporations saw was an opportunity to grab more disposable income.

I’m finding it hard to believe the average grandma is more “livid” and worried about the US Government going broke from entitlements than they are about their own grandkids being $50,000+ in debt from student loans and not being able to afford a house to live in because homes are priced to a dual-income standard. Maybe I’m missing something.

*I know, the ERA Amendment is still shy of 3 states ratification and died in 1982, but it gets reintroduced every year. Maybe someday. But for purposes of creating a dependence on dual incomes, women have won these rights.

Real patriots die at 55

When you turn fifty in America, you are old. When you turn fifty-five you are too old and should consider dying to make room for the next generation of revenue-producing units. It’s the patriotic thing to do. Hear me out on this.

When you turn fifty-five, the human resources department is looking for a legal way to get rid of you despite what they say about you having vital experience. You’re making too much money, you don’t go to as many training classes as they think you should, you are not as mobile with that family and mortgage anchoring you down and you are starting to contribute a whole lot more to the 401(k) than they had planned for matching funds. They will lay you off in a heartbeat and you will not be able to find another job. Ever. Not in this economy.

When you turn fifty-five, the health insurance premiums for the plan you had to buy on your own because your employer could no longer afford to provide benefits will double over last year. Your out-of-pocket health care costs will also go up and you will start racking up pre-existing conditions, making you ineligible for any other insurance. But you only have ten more years to go to qualify for Medicare, so maybe… oh, wait, they are going to raise that to seventy. You’re screwed.

By the time you are fifty-five, you should have already produced at least one, maybe two future revenue-generating units for the corporate consumer machine. They were far more expensive than you thought they would be, but you’ve put off saving for retirement until they finished school and left. You are now ready to front-load your 401(k) and mutual fund portfolio…

But wait! CNN tells you that you have only about a 30% chance of outliving your retirement plan at the rate you’re going. Oh, sure you’ve helped fuel the economy by having kids, buying a larger house than you could afford, paying for their tuition and feeding and clothing them, but now, you are on the taking end of the economy. Whoa, there! Your country frowns on those who take out of the system, regardless of much you’ve contributed in.

Business wants your money. They tell you this all the time by marketing to Boomers. But they don’t want you actually working for them, drawing a salary and sucking up the benefits. Heck, those young GenY brats will work for half what you need and still think it a fortune. Thank God Walmart hires old people as greeters. Oh, you can’t stand for eight hours a day because your sciatica has been acting up? You should go see a doctor about that. Insurance? Man, that’s tough luck buddy.

Next!

The business of America is business and you are standing in the way when you start getting old. Manup and die off when you hit fifty-five. Your country needs you to make that sacrifice to help reduce the unemployment rate and the federal deficit all at the same time. Moreover, you are likely to have life insurance and your kids could sure use that money to prop up retail sales.

Have you lost hope yet? Really? The great United States of America does not need its future derailed by negative-thinking pinheads like you. Is you or is you ain’t a patriot? Time to decide.