We all hear the pundits who talk of calamity should the Congress fail to raise the debt limit above that omnipresent $14.3 Trillion.  The immediate expectation of some is that the government will begin to lose face in the international financial community and it is their desire that we jump to discussions of what happens if the United States defaults on its debt obligations.  

Sometimes it is easier to understand these matters if we relate them to something more personal.  Has anyone ever had an established credit limit on his or her Visa or MasterCard, reached that limit and had the provider of the card refuse to raise the credit limit?  Did you then default on your other obligations or did you pare them down and decide where you could find that money for the new tires or the spring coat you desperately needed?  Did you delay making some expenditure until your expenditures were in alignment with your income? Did you find a second job or find another means of paying off your debts so that you could find a standard of living that was both affordable and realistic for that moment in your life?

I believe this is where we stand with the Debt Limit.  The tragic thing for our federal government is that the consumer is the one who is managing the size of that credit limit.  Wouldn't we all be pleased if all we had to do personally would be to increase our own debt limit and continue to increase it through our lifetime to a sufficiently large sum that we could borrow to make the payments to service that debt and pay for trips to Monte Carlo, Nice and Bali?  Unfortunately, this is not our world and we cannot allow it to be the world of our Congress either.  We are spending our way into oblivion and this has to stop.  Our federal government must find a way to live within its means.  Congress must find a way of reducing its expenditures until they are in alignment with our revenues or find new sources of revenue. 

New sources of revenue?  This sounds like a call to raise taxes, but it is not.  A raise in taxes would be similar to you going to your boss in hard times and insisting on a 20% raise.  Most people will not get it.  Besides, the pure economic truth is that to raise tax rates will not necessarily raise revenues.  People will act in their own best interests and in economically bad times, this would mean they would find roads to economic prosperity that bypass the tax collector whether that is overseas or within this country through tax-free exchanges, delays in investments and sales of property, etc.  For example, instead of selling that property and realizing a large taxable gain, one might borrow from the property and not sell it until better economic times.  The interest expense on the loan would itself be tax deductable and tax revenues would decline, not increase.  As economic activity lessens, the result is that rates increased but we produced less revenue, perhaps less than was being produced before.  Now Obama acknowledged this fact in the 2008 campaign but he also indicated the higher rates would be "more fair".  This was an immediate insight into the naiveté of Barack Obama that like his comment to Joe the Plumber about "spreading the wealth" was defended, not evaluated for its Marxist properties by the press. 

Any time you take money out of the economy, you reduce the size of the economy; there is less growth, less income in future years to tax, fewer jobs, fewer taxpayers and more people dependent upon assistance from the government.  This is a reality that Congressmen and women like Harry Reid and Nancy Pelosi never want to face because their view of government is to provide for not to serve.  They do not see it as a cooperative organization that is intended for those specific purposes outlined in the Constitution.  They see it as a means to "spread the wealth" and make all outcomes equal, well, all outcomes equal at class levels below their own.  They would never want to participate in the laws that cover the common folk themselves.  They will continue to live high off the hog with the wealth they have already accumulated and make it damn near impossible for anyone else to accumulate that type of wealth again.  In their minds, this actually protects their wealth because they have prevented some new upstart from accumulating more stuff than they can accumulate before they die.  

Congress needs to play hardball on the Debt Limit.  Democrats have already demonstrated they are willing to enter a new year without a budget, finance the government with Continuing Resolutions and hold military families hostage to negotiations for reductions in any of their pet areas.  The Debt Limit is the only avenue Republicans truly have if they are serious about stopping this runaway train.  Thus it is not surprising to hear many in the media frame the argument as "nothing to play with".  To them the Debt Limit is so serious that it must be raised without conditions to avoid economic chaos.  To the contrary, Republicans must let these bureaucrats and politicians know that Republicans are not playing.   They must hold firm or raise that debt limit only if the Senate and the President succumb to the notion that their spending spree is over and we eliminate specific programs, agencies and subsidizations right now, before the Debt Limit is increased.  Promises are not good enough.  These democrats are corrupt and they cannot be trusted.  Republicans should be well schooled in the ways democrats negotiate and they must ignore promises and demand prior action.  If the Republican Congress plays Charlie Brown and lets the Democrats hold the football again, there will be a third party and I will likely be a part of it.