People who don’t know squat about economics and government seem to be spouting off left and right about the current troubles we’re facing vis-a-vis the debt ceiling increase. With that lead-in, here are a few observations from me:
First of all, it would seem to me that from an organic and natural perspective, hitting the debt ceiling oughtn’t be nearly as catastrophic as it is being foretold currently. What I mean is that by reviewing the histories of the 1985 and 1996 near-misses with the ceiling, there are any number of tactics the Treasury can employ to make sure the bills get paid and we don’t go into ‘default’. That’s organic. However, over the past couple months (longer for those who have been paying close attention), both sides of the Ruling Class have been using the ceiling as a whipping boy for their positions on economic policy: the Tea Party and GOP have been beating the drum for cutting spending, and the president and Democrats have been beating up on “millionaires and billionaires” not paying their “fair share” of, ahem, revenues.
Okay, fair enough. But we’ve now had a crisis manufactured* at the behest of these competing econo-political philosophies. This, of course, is in the shadow of an incompetent (at best) Administration that could easily have poured water on the entire conflagration by explaining steps it might take in order to make sure the checks went out. Instead of a Treasury Secretary and president assuring a nation that steps could be taken and measures implemented to address the situation and stave off a crisis, you have Geithner stoking fear and Obama threatening grandma’s Social Security check. Not instilling confidence, to say the least. The summation of which is that now, unfortunately, if the debt ceiling isn’t raised by Tuesday there will be a catastrophe. Nice work, Barry.
One more point: I know two things with absolute certainty:
One: There will be a deal by Tuesday. Republicans are caving left and right (even though, when we look at it in the end—no tax increases, $-to-$ cuts with the raise, a clearer CBO estimate—it’s a win, albeit small for sanity), and the one thing Obama knows how to do is get elected. In fact, that’s the only success he’s ever had. And he can tell the differences between, say, the Gingrich/Clinton shutdown and the current situation: Things are bigger now, and, well, not only is he not Bill Clinton, but America in 2012 won’t be doing nearly as well as it was in 1996. Obama may be a Socialist and a radical, but he knows how to get elected. He knows missing a ceiling raise would kill him politically because he won’t have a rebounding economy to point at and smile the way Clinton did.
Two: We’re going to be downgraded anyway. I could easily go into S&P’s letter and show you line-for-line how a debt-ceiling increase will do nothing to stave off a downgrade. But how about just a little logic: Do you think we’re in danger of being downgraded because we might not allow ourselves to borrow more money that we don’t have and can never pay back? If so, I’d like to sell you some ‘refurbished’ electronics on eBay. No, even
There’s more to say, but it’s late. Even Congress is done for the night.
-Nick (ColoradoPatriot, from HQ)
*I say manufactured because it ought not be the Armageddon hell scenario that some are describing it. Surely disruption and unpleasantness, but you’d think hearing Shepard Smith and Anderson Cooper (not to mention those jackasses in Washington who nominally work for us) that dogs and cats will be sleeping together come Wednesday at 0001 if we don’t allow more borrowing. Again, would that we had actual leadership and an executive with any wherewithal for running any sort of organization, it would be manageable.