Debt ceilingThe U.S. debt ceiling talks continue to stagnate in Washington, but the degree to which the rest of the country cares seems limited at best. In the meantime, the debate appears to be political theater with two key themes: Treasury Secretary Tim Geithner doesn't want to be the next Hank Paulson, and Republican House Speaker John Boehner will do almost anything for the chance to invite ex-President Obama for a round of golf in 2013.

The chatter on Wall Street reflects a "no big deal" attitude, with some pointing to the recent rally in Treasuries. At least one analyst I spoke with, and many others on business television talk shows, think we've got our eye on the wrong ball with the wrong time horizon.

Overall, Americans seem to care more about the ceiling heights in their often highly leveraged homes, though they are concerned their kids will have to sleep in the financial bed we're making for them. I think people view the interest we pay on the national debt as a personal affront. Even Fed Chairman Ben Bernanke, as he testified on Capitol Hill Wednesday, seemed to be in confession mode. (Read highlights from his testimony here.)

No Big Deal ... At Least Not Yet

The market seems to be reasonably confident a debt ceiling deal will get done soon -- or soon enough -- and that the Treasury will do what it needs to do to put some extra time on the clock if needed. U.S. Treasuries have rallied for weeks, with a pull-back only recently. But, deals do fall through. As Geithner said on NBC's Meet the Press this week, the longer we go, the greater the concern in the markets about the appearance that we "can't get our act together." How embarrassing. But, does anyone really have their act totally together? Are we judging ourselves by American ideals or modern-day economic realities?

Japan's debt to GDP ratio, for instance, is estimated to be over 200% and the Diet doesn't seem to have raising taxes on the proverbial table. Vishaal Bhuyan, chief investment officer at Nariman Point, is bearish on Japan, and points out their tax revenues are the same as they were in 1986, but expenditures have increased nearly threefold. He thinks the U.S. may be on the same path, but suspects it's 10 to 15 years behind Japan.

If Greece Is Bear Stearns, Italy and Spain Are Lehman Brothers

Bhuyan believes the Greek debt crisis is small beans in the scheme of things. He makes a bank bailout analogy: "Greece sort of reminds me of Bear Stearns. Spain and Italy are Lehman Brothers." Bhuyan contends the swirl around Greece has more to do with preempting the psychological failure. He doesn't see how the IMF and the rest of Europe would be able to bail out the bigger countries, calling them "infinitely more important."

Do You Care About the Debt Ceiling?
Yes1 (25.0%)
No1 (25.0%)
Unsure, but gut feeling says it's important1 (25.0%)
Unsure, but gut feeling says it doesn't matter1 (25.0%)

When Things Will Heat Up

Obama once labeled interest payments on the debt as a "hidden domestic enemy." That enemy may be growing more formidable soon. The president has said all bets are off, and without a deal, even Social Security checks may not get written.
A long-time Washington, D.C., attorney offered me another perspective: "If the standoff gets to Aug. 2 without a resolution, Treasury Secretary Geithner gets to decide who will be paid and not paid. When Republican-oriented defense contractors have to wait to be paid, they will run to their beholden Republican senators and congressmen and scream, 'Get back in there and negotiate a deal, now!' There will be a deal in a week."

In other words, Social Security recipients may leave a message, but the defense contractor's collections officer will likely show up at Congress' door. As for Senate Minority Leader Mitch McConnell's latest move, he added, "McConnell's new proposal to cede to Obama for the rest of his term the power to raise the debt limit unilaterally if no deal is reached is a cute ploy to beat Obama to the punch regarding the possibility that he would play the Constitution card and side-step the Congress. However, the details of the process that the minority leader is proposing probably will kill his otherwise cute trick."

A National Disgrace

Meanwhile, many Americans can't help but wonder what the whole issue means to them, and parents with young children worry about the future we're setting for the next generation. Buddy Schowalter of Leesburg, Va., who has two teen sons and is a pastor, draws on Proverbs 22:26-27, "Don't agree to guarantee another person's debt or put up security for someone else. If you can't pay it, even your bed will be snatched from under you," he paraphrases. "I'm beginning to worry that my children won't have a proverbial bed in which to sleep.

Philadelphia attorney Janesa Checchia, a mother of two teen girls, says, "It still amazes me how many people do not care about issues such as this. I hope that your story can help people to understand that this not only affects them, but generations after us. I hope that my children can flourish. I strongly believe that our present inability to clean up the country's fiscal mess will seriously hamper their ability to do so."

Deb Shaw of Saint Augustine, Fla., worries history may repeat itself: "My 35 year old is doing great but instead of kids moving back home I am very afraid parents will have to move in with their kids. I am remembering sadly all the stories my Grandmother told me about the great depression and stories of my grandfather riding the rails to find work to send money home. It's not that bad YET! I am worried though."

If the banks were "too big to fail," perhaps the debt ceiling is "too high to matter."

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I think we should not pay all of Congress, both houses. They got us here and they should pay it all back. They thought nothing of taking our Social Security trust fund money and putting an IOU in the file. Get the ORANGE JUMP SUITS OUT FOR THEM!!!!!!!!

July 21 2011 at 10:53 AM Report abuse rate up rate down Reply
Samir semaan

When the debt ceiling is not raised then catastrophe will happen specially if the debtors want to sell their bonds and the bond holders have the right to sell their bonds and the taxpayers promised long ago to pay when it is required and the dollar value all around the world will be diminish that is american economy run. With the raising of debt ceiling spending cuts and raising taxes and raise the retirement age and cap on spending will save 3 thrillion dollars and will boost the economy. Too if you balance the budget in one year you hurt the growth of the economy.

July 19 2011 at 11:41 PM Report abuse rate up rate down Reply

What would happen if the Federal Reserve tore-up/ forgive the Federal bonds that it purchased in QE1 and QE2?

That would reduce the National Debt. It has been done many times for developing countries. Would it eve impact inflation since the FED already owns those government bonds?

July 17 2011 at 7:15 PM Report abuse rate up rate down Reply

Will there be another financial crisis if the federal debt ceiling is not raised?

July 17 2011 at 6:14 PM Report abuse rate up rate down Reply
Samir semaan

Sorry to say many are not inform about the issue in reality if you owe money to the bank or to private lendar and you default on paying the monthly payment for a time or two months that is bankrupsy now a government cannot pay its bills on the international market one day that is default and bankrupsy of government that is the big issue anything else is not important whether spending cuts or raising taxes or boosting the economy is nothing compares to a matter of national security and the standing of the USA in the world of economics so get this adults in Washington to give some of their egos or the national security act will be initiated and the fifth amendment will be invoke .

July 16 2011 at 12:23 PM Report abuse rate up rate down Reply

What happens if the Federal Reserve simply tears up/ forgives the US Govenment bonds that it purchased in QE1 and QE2?
That would reduce the national debt. IT been done many times before for developing countries. The only impact would be possible inflation

July 15 2011 at 1:39 PM Report abuse +1 rate up rate down Reply

what idiot, or group of idiots, would give obama MORE authority to raise the debt ceiling? His sole mission in life is to destroy this country and he's well on his way.

July 15 2011 at 1:11 PM Report abuse +1 rate up rate down Reply
Samir semaan

While the debt ceiling is important and needs to be raised the important how to pay for it is by raising taxes on people who make one million and more raising the age limit to 70 years and cap medicaid less 500 billions and medicare another 500 billions and establishing the office of anticorruption to see who is eligible for social services if a deal will not reach the president must invoke the national security act and the fifth amendment to print more money and forget about the ratings and start raising the interest rates to at least 8 % so every dollar will come to the USA.

July 15 2011 at 12:16 AM Report abuse rate up rate down Reply

In the beginning, GOD created MAN. Then after seeing what HE had created he quickly removed all traces of intelligence and wisdom from HIS creation. Don't believe it? Read these comments!

July 14 2011 at 7:40 PM Report abuse -1 rate up rate down Reply

IMF christine LaGarde told the US that in order to keep their status the US would have to raise taxes by 35% and cut the budget by 35%. HEY France how much you owe the US since WWWII? Huh when we sent our brave men and women to die on Normandy beaches. Happy Bastille Day to you -- I wonder how much foreign aid we give France?
Or how much foreign aid did we give the world bank?

July 14 2011 at 6:43 PM Report abuse rate up rate down Reply
1 reply to jkennedy806's comment

Educate yourself.

Partial summary of French soldiers and sailors killed and wounded as allies during the American Revolution (1778-1783)

July 14 2011 at 11:52 PM Report abuse -1 rate up rate down Reply