Gray: Setting fire to the debt ceiling?

A warning to America about not raising the debt ceiling: “Amer­ica, stop playing with fire.”

That warning doesn’t come from me. It comes from Li Daokui, an advisor to the Chinese Central Bank at a conference in Beijing China back on June 8.

I don’t know what bothers me more about that state­ment — that it comes from a representative within a communist government criticizing America about its economic situation, or that Mr. Daokui is abso­lutely right. Here’s the reality we face. According to the news­paper China Daily, the Chinese own about eight percent of our debt, which doesn’t sound like much until you consider that percentage equals more than $1.16 trillion. And that’s as of the first quarter of this year. And now we are flirting with a default that is less than a month away.

We are playing with fire — at least Democrats and Republicans in Congress and the White House are.

Democrats want business as usual and just raise the debt ceiling and keep mov­ing. Republicans are willing to raise the debt ceiling, but will only do so if there are major budget cuts which House Speaker John Boehner has indicated is nonnegotiable. In the mid­dle of these disagreements are a slew of political ads trying to manipulate who’s to blame on both sides … and we wonder why we are at an impasse.

Now imagine a nation like China or other nations like Japan or Brazil, who own U.S. debts, having to potentially lose their investments because of partisanship in Congress.

Would you want to con­tinue to do business with us? Would you even want to listen to us when it comes to foreign policy or world economics?

Think of it like this: If you were a bank and some­one came to you trying to buy a house but they had recently defaulted on another loan, how quickly would you want to give them another loan? How influential would they even be in the decisions you make? Chances are you wouldn’t loan the money or if you did, it would be un­der terms of much higher interest.

I would imagine that would be the case with all our foreign debt owners, which would mean even more debt, and ultimately our national debt suck­ing up more of our gross domestic product. In a nutshell, that means higher prices and fewer dollars in our pockets.

Now no one really knows for sure what will happen if we don’t raise the debt ceil­ing. Words like cataclysmic, financial Armageddon, financial meltdown and disaster are being kicked around.

I hope that is just journal­istic sensationalism being kicked around but we must realize when it comes to the U.S. economy, what­ever way we go, so goes the world.

Also, Congress needs to realize that they are not just playing with fire in the political arena. This is the livelihood of millions of Americans; let’s not forget that our own citizens — via Social Security and other pension funds — are the largest holders of U.S.

debt. That would mean no payback for all those IOUs to the Social Security trust fund.

But besides payback to our own people we also lose another invaluable thing — credibility.

The world is starving for good leadership and in the absence of it, they will look to nations like China or others.

We cannot prance ourselves into the United Nations, the International Monetary Fund or any other world body acting like we are too big to fail by not paying our bills.

Ironically, all of this is happening right through Fourth of July week. With humble beginnings, America earned its keep as a nation and slowly earned respect among other na­tions as a world leader.

What symbol do we show the world if we default on our loans? I think it would show not only, as Mr. Daokui said, that we are “playing with fire,” but it would show something worse: that we are willing to start one as well.

Gray lives in Woodbridge. Email him at davongray@verizon.net.