Over the weekend we visited Monticello, home of Thomas Jefferson.  His notion of public service stands in stark contrast to what I see going on in Washington today.  As the clock ticks down to a world-wide economic meltdown that will make the last couple of years look like “the good old days”, I thought it might be interesting to take a look at the country as it was in the beginning.

In stark contrast to the average salary of $174,000 for a member of congress today, in Jefferson’s time, members of congress were paid $6 per diem while in session. No wonder Jefferson died leaving substantial debts requiring his estate to sell all slaves remaining on the plantation.  Jefferson, always more of a scientist and statesman than a farmer, never made enough on the plantation to cover its costs.

Thomas Jefferson’s Public Service

Unlike Washington, Jefferson served the new country’s leadership during the Revolutionary War.  Rather than fighting, Jefferson’s public service involved the state legislature.  After the war, his public service included secretary of state under George Washington, Vice President under John Adams, and minister to France before becoming the third President of the United States.

Congress Today

Raging controversy hung over the early Congress over the issues of slavery, states’ rights, mounting debt, and impending war with Britain.  Today’s congress is no less contentious, despite resolutions to most of these early issues.  Remaining problems of mounting debt and differing views on states’ rights remain.

The most serious problem today is the mounting federal debt, which threatens to burden our children and grandchildren with lower standards of living to repay this debt.  The threat caused by this massive debt is unquestionable one of the most serious issues facing congress.  However, the stalemate caused by the failure of congress to increase the federal debt limit WILL have an immediate, catastrophic impact not only on the United States, but much of the rest of the world already reeling from several years of economic difficulty.

This game of chicken played to gain political clout will be disastrous if not resolved within the next 2 weeks. Some folks figure it’d do everybody some good if we just let the default happen.  That’s a dangerous attitude, according to Reuters.  Here’s what economists believe will happen if congress fails to reach an agreement on or about August 2:

A default will likely lead to market panic, a devastating spike in interest rates, lack of credit, a plunging U.S. dollar and another, potentially more severe, recession, with repercussions for the global economy.

Analysts say that in the event of a default, the U.S. Treasury will have no option but to pay interest on the debt first, so that no payments to creditors are missed.

After paying interest, the government will have to decide if, and how much, of the August 3 Social Security checks can be paid and whether there will be enough left to pay U.S. troops, including those stationed overseas.  Payments to Medicare and Medicaid must also be made, but there won’t be enough money for that.  Meanwhile the rest of the government will shut down including all federal workers, federal courts, federal property, federal law enforcement …

And, if an agreement is reached before the August 2 deadline, it must be sufficient to cover payments for some time.  Otherwise, the current situation repeats itself in a month or a couple of months leading to greater instability.

How This Effects People Over 40

Jobs.  Those in federal employ, will likely get unpaid leave until the situation is resolved.  Even those employed in private companies will likely experience some unemployment through a sluggish economy and higher borrowing costs by their employers.

Entitlements. Those on Social Security may get some payments, but likely not the entire amount and not every month.  For seniors and the disabled living on meager incomes this means more hardship.  Medicare and Medicaid payments might not go out, meaning healthcare for those covered under these plans may be interrupted.

Stock and Equity Markets.  A likely downturn in both markets that makes recent declines of 800 points per day look mild.  The recent recession decreased the stock market and improvements since then have not returned these markets to the their pre-2008 levels yet.  Further declines will cripple families putting kids through college with savings painstakingly accumulated over many years and some kids may not be able to go to school.  Retired workers who counted on their pensions and 401Ks to see them through retirement may see these savings evaporate.  Already, baby boomers face an uncertain future where retirement looks unlikely.

When baby boomers fail to retire because they can’t afford to, they take up jobs that would normally open up to younger workers.  This further exacerbates the job outlook.

Private Industry. Private companies will suffer either directly, if they are government contractors, or indirectly through the declining economy.

The Rest of the World.  The EU will likely collapse under the increased pressure on the liquidity powder keg they’re already sitting on with defaults in Greece, Portugal, and Ireland.  Much of the rest of the world is supported through the Western World, with the exception of a few insulated countries.  Without government money and declining corporate money, these economies will likely collapse, as well.

Public Service in the 21st Century

Arguably our notion of public service in the 21st century is not necessarily for the public good.  Instead, both parties engage in posturing and fail to accept the realities of our situation.  I agree with Republicans that the debt has gotten seriously out of control, but holding the nation hostage to push their political agenda is contemptible.  Meanwhile, Democrats need to face some harsh realities that, while we would like to be good stewards and provide for the common good, we’re not always in the financial situation to do so.  Everyone, including the wealthy and big businesses, need to pay their fair share.  Those grown comfortable living on the public largess need to suck it up and take care of themselves.  Everyone needs to become a public servant for the good of the ENTIRE world.