Spending cuts must be well thought out

Economics, especially with respect to government, can be very confusing. We hear so much from right-wing pundits and the tea party that the debt ceiling should not be raised and it would not be a big deal for the U.S. to default on its debts.

This view is wrong, and some very easy math can tell you why. Right now, the interest rate the U.S. pays on its debt is at a 50-year low, about 3 percent. Greece, which is on the edge of defaulting on its debt, pays a staggering 18 percent interest. If the U.S. gets close to default, our interest rate shoots from 3.22 percent to 18 percent.

Now, if you have an adjustable-rate mortgage and interest rates go up resulting in a $1,000-more-a-month payment on the mortgage, what net spending reduction do you get by canceling your cable service that costs $100 a month? The rise in the interest rate eats up all the other spending reductions combined.

Do we need to reduce wasteful and redundant government spending? Yes, we do. But it needs to be done in a thoughtful manner. It needs to be done in ways that don’t damage a fragile and painfully slow economic recovery. It does not need to be done as an act of political brinkmanship. It does not need to be done on the backs of our poor and elderly. It needs to be done with balance: a blend of revenue increases and spending cuts. Compromise is not a dirty word. It’s the way that things get done.

Patti Siwicki

Elk Grove Village