The Debt Limit Debacle and What It Means

If the federal government does not increase the debt limit, that means it can no longer borrow money. If it cannot borrow money, the only money it can spend is what it takes in through taxes and excise fees. 

Because congress and our two presidents cut taxes so much since 2001, and because tax collections are way down because of the recession and high unemployment (less $ in income taxes being collected), there would not be enough money to both pay the debt and present expenses. Those present expenses include things like:

• military pay and on-base housing expenses
• veterans benefits (including the Veterans Administration hospitals and cemeteries)
• FAA, including the air traffic control system
• TSA (I wonder if the airports will stay open for long)
• the costs of two wars and all military bases around the world
• the costs of replacing military weapons and equipment
• Social Security
• Medicare
• Medicaid
• interstate highways and other construction (including projects already under way)
• national parks
• FBI
• CIA
• DEA
• FDA food inspection
• food stamps
• welfare programs of any kind
• unemployment insurance benefits
• student loans and grants
• funding of existing educational grants for research
• and so on

In one week, Obama must decide which things get paid and which don't. He must continue to make payments on the debt, and that could be 100% or a fraction of all tax money collected. It all depends on how badly he wants the nation's credit rating to fall. 

But I can almost guarantee big cuts in SS, Medicare, and Medicaid. What happens if SS, Medicare, and Medicaid are cut?

Here is a small glimpse.

There are 1.9 million people 65+ years of age who live in nursing homes (in group quarters) according to the recent US census (http://www.census.gov/compendia/statab/2011/tables/11s0034.pdf). They receive Social Security, which they use to buy food and necessities, and Medicare, which they use to pay the costs of living in a nursing home, being treated by doctors, going to the hospital, and receiving medicines. There are also people under 65 who live in nursing homes (roughly 200,000; my Mom was one, beginning at age 51 with a brain aneurysm and lasting until her death from a drug-resistant infection at 69). The vast majority, from coma patients to those made invalid through accident or disease, receives Medicaid to pay for their housing, medicines, doctor's visits, and hospital stays (and if you're under 65 and in a nursing home, chances are you will go to the hospital a number of times). Getting old is a hell of an expensive thing.

Then there are the 37.8 million total (including the 1.9 million above) who are 65+. Each receives both Social Security and Medicare. With that, they pay for medicines, doctor's and hospital visists, food, rent, electric and gas, water, trash, gasoline, clothing, recreation, and anything else.

It is possible that none of these people are likely to receive any more help or money after next week. That means Mom, Dad, and/or the grandparents currently living in nursing homes will need a place to live, and will need the same level of care they received in that facility.

What is the economic impact of bringing home 2.1 million people from nursing homes?

Within a few months, most nursing home systems around the country, and there were 16,100 according to a survey conducted in 2004 by the Centers for Disease Control (http://www.census.gov/compendia/statab/2011/tables/11s0034.pdf) will collapse and go bankrupt. That number is likely higher since the CDC's 2004 survey, with group living populations for those 65+ increasing from 1.5 to 1.9 million during that time according to Census.

Other than the handful that remain open due to the residents' ability to pay out of pocket, this will result in over 936,000 people (as of the 2004 CDC survey and likely more), being thrown out of work. These people include registered nurses, licensed practical nurses, certified nursing assistants, nursse's aids, and orderlies. This does not include the kitchen workers (easly 10 per facility) who would lose their jobs, nor does it include cleaning staff, pharmacists, physicians (especially geriatric specialists) who service the facilities and their residents.

Then there are those people whose jobs depend on the money spent by the nursing homes and their employees. This includes pharmaceutical companies, medical instrument manufacturers (probably most are not foreign), uniform anufacturers and cleaners), automobile manufacturers, gas station attendants, oil refinery workers, grocers and their employees, farmers, ranchers, railway workers, truck drivers, providers of housing, the doctors and dentists they see for personal illness and such, ALL will lose the as customers (at least half of their normal business, if not more).

When they are laid off in the next few months, these people will be out of work with NO unemployment insurance and nowhere else to go to work. 

Then, comes the tax results.

Suddenly, over 1 million people (not to mention the secondary and tertiery employment lost because they're out of work), easily 1 percentage point in the national unemployment statistic, are no longer paying federal, state, and in some cases city income taxes. All of that tax money stops being collected, meaning the president, state governors, and local mayors and city councils have less money to work with. That means MORE government cuts in jobs and services.

Sounding like a house of cards to you? See how much primary, secondary, and tertiery employment the government creates by supplying so many dollars to just in this one sector?

One sector should do a booming business, though: funeral homes.

I mean, how many of you have tried to keep a goldfish alive on your own let alone a 65+ year old human being who needs 24.7 care? How are you going to go to work and see to it that Mom, Dad, Grandma, and/or Grandpa receive medicines on time, sleep without rolling out of bed (gotta' get a hospital bed with a railing so they don't fall out), oxygen (when needed, including buying it, changing out the tanks, etc.), go to doctor visits, eat properly and in conjunction with their medicines, get enough fluids (not too little or too much), bathe, or use the bathroom (yes, you will have to put them on, take them off, and wipe their bottoms).

And that's just the impact of 2.1 million people who need round-the-clock care suddenly being home, not to mention the million+ people suddenly out of work.

And that's not even my biggest concern. My biggest concern is what happens when the military, many of whom are walking wounded with PTSD, many of whom have family being thrown off base with no means of support, suddenly don't get paid? Will there be a coup? 

Now, that's certainly something to think about over the next few weeks. That's what it means in a very real sense. And, that does not include what happens to us in an international fiscal sense.

Are you sure this is what you want, Tea Party members? Really? 

--- What was the original American Aurora? The Aurora was a newspaper published by Benjamin Franklin Bache , a grandson of Benjamin Franklin. The Aurora was published in Philadelphia, our nation's capitol at the time.

The Aurora was highly critical of what Bache felt was the tyrannous Federalist governments of presidents Washington and Adams.

The result? Adams imprisoned Bache for sedition, where he languished, awaiting trial, until his death from yellow fever at age 29.