Debt Crisis Yawner

Again with the default talk and the manufactured panic, all to convince the American people to further rob their grandkids to pay for current services.  As I noted in a previous post, a default is when you fail to pay the interest on your debts, not when you stop paying for current services.  The government can layoff several departments worth of employees and that isn't default; that's economizing.  As George Will noted, "Default is a choice."  The government need merely service the debt in order to maintain the full faith and credit of the US.  That is about 10% of the budget...  er... continuing resolution (we don't do budgets anymore despite US law that requires them).  If the debt ceiling is not raised, that puts the ball in Obama's court to pick and choose how the incoming revenues are disbursed.  He would have to CHOOSE to default.  Sadly, I wouldn't put it past him.  He has actually spent shutdown budget repeatedly blocking off National Mall.

The Republicans might be on to something with the shutdown and the debt crisis.  They have long claimed to be the party of small government (disingenuously) and this gives them the opportunity to achieve that.  Failing to raise the debt ceiling will force government to spend within its means and the shutdown can be made permanent.  Heck, the government is still 83% open, hardly a shutdown.

Of note, neither party wants to diminish the power of the Federal Government.  A sizable minority of Republicans - the Tea Party Caucus - have the party over a barrel.  Boehner cannot pass anything without their approval unless he does so with Democratic votes.  Such a move breaks the Republican caucus in half and ends his speakership.  Much as the rest of the Republicans hate that, they understand that to ostracize the Tea Partiers is to cripple their majority.

Back to the Debt Limit, imagine what the last 5 years growth would have been like had it not been raised.  Six trillion dollars of borrowed money would not have inflated the growth numbers.  Consider that gross domestic product (GDP) is defined as follows:

C + I + G + (X - M)

That is, Consumption + Investment + Government + (eXports - iMports).  Note that government spending is reckoned in the figures.  Thus, by borrowing all that money, the government goosed the numbers.  Consider if I took out a $100,000 loan this year and counted that as income.  Wow, this would be a really great year.  That is what the government does every year.  And even so, our growth has been pathetic, hovering at 2%.  Cutoff the borrowing and the truth will out.  Almost everyone in Washington is afraid of the truth.

"Fool me once, shame on you; fool me twice, shame on me; fool me for five years, I'm an Obama voter."

The quote is from Charlie Martin.  Here's a link to the article:

http://pjmedia.com/tatler/2013/10/14/i-told-you-so-obamacare-edition/