So, who is negotiating your debt ceiling?

Are you taking a cue from Washington and appointing one child to represent the father and one to represent the mother in negotiations? Is discretionary spending (desserts, movies) on the table, or is one side demanding just a clean increase with no conditions?

I’m kidding, of course. Well, only slightly.

Each of us has a debt ceiling, set mainly by the bank-imposed limits on our credit cards or the things we can use as collateral. But there are many more ways to borrow money, from bank loans to home equity lines of credit to applying for even more credit cards or calling to ask for a higher limit.

And we’re doing all of that, apparently.

While we’re sitting at home passing judgment on profligate politicians in Washington, the Federal Reserve Bank of New York’s Center for Microeconomic Data has released its latest report on total household debt for the first quarter of the year. The news isn’t good.

A lot of observers, myself included, know that the debt ceiling negotiations in Washington amount to little more than chipping ice for your next drink off a mountainous iceberg of red ink. Republicans are demanding spending cuts, but those all involve discretionary spending, or just a portion of a part of the overall budget equal to about 30%. The rest is on autopilot and mostly out of control — programs (dare we say entitlements) that make up 63%. About 8% beyond that goes toward interest on the debt, but that’s growing as interest rates rise to make up for all the overspending.

The United States, in the words of a recent piece in The Economist, faces an overall “debt nightmare.” Waking up seems to be hard.

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Some people say the federal government shouldn’t have a debt ceiling at all. It’s an arbitrary thing that periodically gives Republicans leverage to demand cuts — unless they control the White House and both houses of Congress, that is. 

But, really, we everyday people have to deal with limits, and we can’t even legally print our own money. Do we really want a federal government that’s never forced to pause and think about a national debt that’s approaching $32 trillion? Even if this pause never really slows down the spending?

But, getting back to household debt, the New York Fed says this was the only time in the 20-year history of this report that debt has not dropped during the first quarter as compared to the last quarter of the previous year. Americans tend to overspend for the holidays, then pay off a good portion of that after the New Year. Not this time.

Total household debt now stands at $17.05 trillion, which is $148 billion more than the previous quarter and $2.9 trillion more than at the end of 2019.

Inflation is, of course, the prime suspect. Reports say we’re getting pay raises, but they aren’t big enough. Civilian workers got about 5.1% more on average last year, but inflation was 6.5% for the year, with food up by 10.4%, according to the Bureau of Labor Statistics.

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To make up the difference, we’re putting more everyday stuff on credit, which is a really unwise thing to do. That’s especially true considering Bankrate.com reports the average credit card interest rate was 20.3% as of May 10.

Some people have little choice. They can’t afford to eat or drive without a credit card, if they’re lucky enough to have one. Lower income brackets always get whipsawed the most by economic troubles, left with few choices or strategies. They deserve the most consideration, but rarely get it.

But for the rest of us, it looks as if we’re not having many debt ceiling discussions at the kitchen table.

I’ve written about this so much during the past few years that it has become a running joke to say the next recession is only six months away. Interest rates rise, and yet hiring remains strong and delinquency rates low. (The New York Fed said only 1% of aggregate student debt was 90 days past due in the first quarter. Why do we need to forgive those loans again?)

And yet it’s hard to ignore the warning signs. Not only have some large banks gone under, but non-financial companies are compiling huge debts in the U.S. and Europe.

“The bad news is that businesses will soon find themselves waking up to a painful debt hangover that will constrain their choices in the years ahead,” The Economist said.

But that’s at least six months away. You still have plenty of time to keep laying down your own debt-ceiling ultimatums. Maybe.