Politics & Government

Locals Want End to Debt Debate

Opinions differ but nearly all want Congress and the president to take action.

Residents in central New Jersey agree that defaulting on the national debt would be catastrophic, but they differ on proposed solutions and who is to blame for the impasse at the federal level.

Some, like Lawrence resident Steve Amiott, said they believe the debt has grown too large, but that raising taxes would be the wrong way to address the problem. Others, like Paul Ho of East Brunswick, say that a mix of new revenues – added taxes on higher earners – and service cuts are needed. 

But nearly everyone says the two sides need to get together and find a compromise before the nation reaches the precipice of default.

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Democrats and Republicans in Washington are locked in a debate over whether the federal government should raise its debt limit by the August deadline, something that has been done regularly for the last 50 years.

Republicans want President Barack Obama to agree to large budget cuts, including to Medicare, Medicaid and Social Security, or they say they are willing to let the nation default on its debt. President Obama and the Democrats say that would be catastrophic for the economy.

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The pressure on the two sides increased Wednesday. According to the Huffington Post, Moody’s Investors Services announced Wednesday that it may cut America's AAA credit rating because of the " ‘rising possibility’ that Congress will not soon approve a deal to raise the debt limit.”

Moody's said in a statement that it has placed the AAA bond rating of the government of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default on US Treasury debt obligations. On June 2, Moody's had announced that a rating review would be likely in mid July unless there was meaningful progress in negotiations to raise the debt limit.

In conjunction with this action, Moody's has placed on review for possible downgrade the AAA ratings of financial institutions directly linked to the US government: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks. We have also placed on review for possible downgrade securities either guaranteed by, backed by collateral securities issued by, or otherwise directly linked to the US government or the affected financial institutions.

People across Central Jersey also expressed concerns. 

“It’s a matter of national economic security, and the financial backing of the United States is potentially at stake,” Amiott said, when asked why he has been staying on top of the topic. “I’m concerned. I’m worried about sound fiscal policy. We shouldn’t have this much debt as compared to our gross domestic product. I’ve heard estimates that our debt is equal to our GDP all the way up to four times our GDP. That’s not sound fiscal policy.”

The Lawrence resident, who has been following the issue on television and in the newspapers, said he believes it's responsible for Republicans to refuse to consider raising taxes as part of a debt ceiling deal.

“We’re already over taxed. They already take enough of our money.”

But he qualified that statement by saying, “It’s not really a cut-and-dried answer. The Republicans are at fault for raising the debt ceiling 30-some times previous to this. All of a sudden they decide to make a show for political gain. The Republicans are at fault just as much as the Democrats.”

Amiott said failing to raise the ceiling will not result in default.

“We have enough money in revenue to service our debts. That’s all fear mongering.”

Ho, who was interviewed Tuesday at the East Brunswick Senior Center, disagreed.

“I certainly don’t want to see the government in default, the economy would be effected severely, as would our reputation.”

He said he hoped talk by Republicans that America should not extend the debt ceiling was just that, talk.

“I hope it’s just a tactic in negotiations.”

He said severe cuts to Social Security and Medicare are unjustified mostly because they are not the cause of America’s current financial situation. The Bush tax cuts, the recession caused by the 2008 financial crisis, and the wars in Iraq and Afghanistan are the three primary causes of the current deficit, not entitlement programs. Letting the Bush tax cuts expire would help lower the deficit immediately.

“Our country is in financial straights, and I believe people in all walks of life should contribute to solving the program,” he said. “I believe a fair way to help the issue is to cut programs and increase revenue at the same time.”

He said increasing or closing tax loopholes on people making $250,000 or more is justified.

“They have enjoyed tax breaks. The Bush tax breaks were supposed to expire in 2010, we should let them expire now in 2012.”

No matter the final solution, Ho said the ramifications of America defaulting on its loans would be catastrophic.

Sherri Low, who lives in a suburb of Columbus, Ohio, was in Princeton on Wednesday while on a mission trip to help needy families in Trenton. She said she has not been following the debt debate.

"I've been busy paying attention to that (my mission work), there are too many people in need," Low said.

But Reed Gusciora, a Democratic Assemblyman who lived in Princeton until redistricting forced him to move to Trenton, says that is why the debate is important.

"I've been following the debt-ceiling debate very closely because I don't want our economy to collapse," he said.

He blames the Republicans for not “working in a bipartisan effort with the president to solve this economic crisis. All options, including raising taxes, should be discussed when it comes to how to resolve the issue.

"No one likes to raise taxes," he said. "But you've got to put everything on the table."

Manual Oro, of Jersey City, was in Princeton with is family on Wednesday. He said he hasn't been following the debt-ceiling debate in Congress because he's frustrated by the actions of President Obama, Congress and the Senate.

"It seems like they're not concerned with the average person in this country, only with what big business wants," Oro said. “I see no difference between (President Barack) Obama and (President George W.) Bush or Republicans and Democrats. What they should try to do is tax the wealthy.”


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