Cooler Heads Must Prevail

July 28, 2011

All eyes are on the debt ceiling debate. I’m in the camp that believes that regardless of whatever other issues we face relative to the size of the debt, without an increase in the debt ceiling the effects would be immediate and catastrophic. Interest on the debt would be paid, but everything else would have to be cut by close to 50%. Millions of people, businesses, and institutions would not receive payments that they are expecting and in most cases absolutely depend on to survive or continue operating. The first order economic effects would be huge, and the world economy would reverberate accordingly.

I cannot believe that the majority in Congress would allow this to happen. There is a group on the Republican right who are pursuing a Reichstag fire strategy to force a showdown over the Constitutional nuclear option whereby Obama would be forced to invoke the 14th Amendment to go ahead and pay the bills. This faction is then betting that the Supreme Court would strike down that action and force draconian budget cuts on the US economy. The result of this strategy would be governmental paralysis, economic chaos, and a possible power vacuum. It cannot be allowed. Cooler heads must prevail, otherwise we could face an immediate future that is too awful to even contemplate.

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This entry was posted on July 28, 2011 at 4:48 pm and is filed under Money and The Fed, Professional Edition. You can follow any responses to this entry through the RSS 2.0 feed.

25 Responses to Cooler Heads Must Prevail

John Haynes on July 28, 2011 at 5:15 pm

Cooler Heads Must Prevail???

If the events you describe come to pass, it will be because the crappy senate and President would not approve the house bill(s) which are a reasonable offer.
Your buddies don’t like it because it brings the subject back up during election season thus highlighting the crappy job they have been doing.
Keep the liberal ideas in your pants please.
Lee Adler on July 28, 2011 at 7:14 pm

End the private medical sales industry ripoff of the American people, cut the military budget by 2/3 and raise taxes to levels commensurate with the rest of the world and the problem is solved.

Or you can choose low taxes and no social safety net. Then you’ll have to pay for the walls and security gates around your home, and for the all the new prisons and the paramilitary guard that you’ll need for your security if the minimal social safety net in the US is dismantled. Then of course there will be the loss of freedom that will go with that.

Welcome to Paraguay.

Here’s what your boys have done.
anoscope on July 28, 2011 at 8:18 pm

it seems that at least one rating agency will soon reduce US debt rating by at least one grade. From some reports 4 trillion over 10 years will not be enough to stop that downgrade. The real question comes to the Social security entltlements, the Dept of ED funding of much of what should be funded by state/local gov’ts, and the massive size/functions of extra-constitutional functions allowed (all others reserved to the states, or to the people) in the US constitution as amended (19 powers if I recall correctly). Example: can we downsize ‘delivery’ of mail to the home to one or two times a week, po box 3 days a week, no door to door delivery of the mail, etc. Can we stop paying for apartments for people at market that we charge nothing and even ‘refund’ the utility bills. Can we stop crazy checks (SSI) for misbehaving kids in school? Can we stop subsidizing most of the farm and stop the use of our food (corn) as a very weak BTU additive to gasoline? the opportunities for saving are innumerable. The senior’s prescription drug Social Security part D could allow for national competition for pricing (not allowed now), food stamps (now called SNAP) could be de-waivered and back to the national standard of benefits given for max 3 months of 24 months. And for consideration: removal of the minimum wage laws (federal, state can do what they will or their citizens will allow). Minimum wages ensure as does much of union membership a high unemploymnet rate of minorities of many kinds. An easy cut would be to delay for 10 years any more implementation of the so-called Obama-care plan. Could be broaden the tax base to 75% of all working citizens (new 5% bracket) and phase out all Earned income tax credits (average $6,000.00 per family yearly – refunds of income tax never paid in at all). Do we really need to pay 80-90% of daycare? the too-much spending (never has been this high) has to flatten and decline. Point is, all we are doing by continual increasing the debt limit is to not recognize and begin to fix the problems. It is fun to spend other people’s money but when you have to borrow $41 of every $100 that you spend, not much chance to pay off the balance. Can anyone agree? Is there really no end to lunacy of doing the same overspending forever? Would you invest in a company that is borrowing money to pay current expenses for a decade? I hope the answer is ‘no’.
John Haynes on July 28, 2011 at 8:40 pm

anoscope –

Well put sir / madam…. Thank You.

I’d have said the same thing if i wern’t such a Tea Bagging Redneck that can’t pour piss out of a boot.
I need a social network to help pay for my beer addiction. And i got hemoroids… ohhh man, i’d pay anything for some drugs to help that problem. I need some socialized medical care except the waiting room must have soft seats… to sit on a bench is like farting razor blades.
Lee Adler on July 28, 2011 at 9:22 pm

If this is what qualifies for discourse in this country, no wonder we’re in such trouble. We have the weakest social safety net in the developed world, and the lowest taxes, yet the haves still complain about the have nots getting too much of the pie. Truly disgusting. Whatever happened to loving thy neighbor and caring for the poor. Nope not in the US. There it’s I got mine and my guns and I’ll use ‘em to keep what I got just so long as I don’t have to pay taxes to support the basic needs of human existence.

Do we want the greatest war machine in the history of the world that wastes trillions on military misadventures and makes weapons makers fabulously wealthy, or do we want a humane society, the choice that every other democracy in the world has made except ours. When the establishment has convinced 35% of the people that the only issues that matter are gay marriage, abortion, guns, and keeping poor people and the elderly from receiving benefits, and middle class people from getting access to health care, then we get a failed state.

I say let the right win this. Give them their cuts without tax increases. Then we can have an election a year or so down the road where the electorate has finally awakened to the real issues of what kind of society we really want.

But if you want to take away benefits, lets take them away. The first one they should take is the mortgage interest deduction. Why the hell should tax payers have to subsidize someone else’s house payment? A lot of people don’t have mortgages, yet they are still subsidizing millions of people to help pay their mortgages. Why should I pay for your choice of borrowing money to pay for a home?

Besides which, ending the mortgage deduction would stop subsidizing the homebuilding industry, and the house prices that are inflated by 25-30% because of the government subsidy. That drop in prices would end the need to subsidize mortgages at all. Everyone would be better off.

People who argue against social welfare are making no less an argument. It’s an argument against the transfer of wealth from the haves to the have nots, yet they are perfectly willing to be in favor of the transfer of wealth from the bulk of the people to those at the top through government programs that favor and provide benefits to the corporate executive class and to the owners of capital. They want to do a reverse Robin Hood where they take from the poor the meager scraps that they have been given, and give it to the rich.

Well, yeah, I’m against that. If that makes me a liberal, it is a label that I am proud to wear.
Lee Adler on July 28, 2011 at 9:42 pm

I say we end industrial welfare altogether. Stop the farm subsidies to the ADMs and Cargills of the world. Stop the foreign tax credit dodge for all multinationals. Stop the profligate weapons spending, and for god’s sake stop the subsidies to the drug makers for ripping off the American people. Oh yeah, stop bailing out bankers. Stop taxing hedge fund managers at half the rate of everyone else. Stop giving capital favored treatment altogether and give equal value to labor. Raise the estate tax.

And stop the biggest tax ripoff of all, the zero interest rate policy that has ripped off the life savings of millions of America’s senior citizens, my mother included. This is a crime against humanity. Instead of worrying about interest rates going up, we should celebrate the idea, so that people can earn a decent return on their savings, instead of having them confiscated to benefit the bankers and the government.
Lee Adler on July 28, 2011 at 9:50 pm

When they start to investigate more of the rabid right, I wonder how many of these charlatans will be exposed as frauds.
Frog on July 28, 2011 at 10:04 pm

Word, Lee! Wery cogent writing tonight!
Frog on July 28, 2011 at 10:04 pm

I meant to type Very.
Jesse on July 28, 2011 at 10:05 pm

Thank you Lee