Monday, July 18, 2011

Default could 'sink the whole boat'

That is the scary headline by AP in their story Default could 'sink the whole boat.' Not raising the debt ceiling could lead to catastrophic political and financial circumstances. The Republicans have determined to risk their political future playing one on one with the president. If the debt ceiling isn't raised - it will be the Republicans that will bear the brunt of the fall out. It has already started.

The Republicans have tried to hoodwink the electorate by connecting budget expenditures with the debt ceiling. They would have you believe that not raising the debt ceiling - their position - would balance the budget. Not true.

The raising of the debt ceiling permits the US to pay its bills. "In other words: raising the debt ceiling does not authorize mores spending–we have already done that. Borrowing simply allows us to pay for the obligations that have already been made. Voting on the debt ceiling is not voting on the budget." [What is the Debt Ceiling?]

The expenditures are an accomplished fact. It is the US Congress that has approved all the spending and past increases in the debt ceiling. The Republicans have a point - the federal government needs to balance the budget. But it can only be done by raising taxes or cutting spending or some combination thereof.

Cutting off their nose to spite their face is an odd way to accomplish a goal of balancing the federal budget. To postulate that it can be done in one stroke of the pen is sheer folly. After all this is the 10th time the debt ceiling has been raised in the past decade.

Trying to leverage their ostensible political goal of balancing the budget by risking the financial solvency and reputation of the United States is idiotic.

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