Several social dilemmas can be seen in the current debate over the debt ceiling that has been going on in our government over the past year. The debate is essentially this: Republicans do not want to raise our debt ceiling any further with out making spending cuts and by refraining from raising taxes. The Democrats want to raise the debt ceiling and raise taxes along with it in order to fund government programs. The debt ceiling must be raised in order to pay for current government operational expenses, which a large portion of it is for defense. Most Americans are troubled by the amassing debt our government continues to acquire but there is a sharp divide on how to stop the debt from increasing and how to start decreasing it.
There is a clear and major collective action problem in this situation. The Democrats propose that if we just raise taxes on wealthy individuals and corporations we will be able to pay our debts off. The Republicans argue that is irrational and it will not work, they propose that if taxes are raised on the wealthy, which they say are the primary employers in the US, then they will either stop hiring people that are in need of jobs or possibly even begin to cut jobs, which in turn would create a smaller tax paying base and make more people dependent on expensive governmental programs. That seems logical and beneficial to everyone. The Democrats, on the other hand, assert in order to make cuts significant enough to impact the national debt we will have to cut into essential government programs such as Medicare, Medicaid and unemployment benefits which could leave millions of needy Americans stranded in dire need of help. They believe that the only way to help our debt crisis is by raising taxes on those that are already well off.
Unfortunately, the majority of both parties have taken these strong and opposite stances and are not willing to work on centrist approaches that could benefit the majority of Americans, rather they are more interested in strengthening their own party’s influence and power. There have been fierce public debates between the President and the Speaker of the House over the rule and agenda setting. Each party keeps using smear and threat tactics on order to get their way on this legislation. We almost had an entre government shut down because of the Republicans threatening the Democrats over raising taxes. Ultimately a debt ceiling bill was passed but with very little provisions for measures aimed towards reducing the current deficits.
The problem may very well be a principle-agent problem; this issue seems far too complex for partisan politicians to resolve. The solution may lie in setting up a non-partisan intuition of finance professionals to manage our country’s money and to impose financial limits that must be respected by our government. Through their expertise maybe they can establish yearly spending limits for the government and all bills must be passed within the established financial parameters. Our national debt is growing at an alarming rate and partisan politics are only exacerbating this major social dilemma we are currently facing.