"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Friday, June 24, 2011

The Regular Guy Believes... The World Doesn't End if the Credit Limit Isn't Raised

The talks between the Obama administration and Congressional Republicans about deficit reduction have apparently broken down.   The administration wants tax increases that would fall heavily on high-income Americans (read:  small business owners who do most of the job-creation); Republicans, not surprisingly, think that raising taxes in a precarious, slow-growing, jobless recovery is a bad idea.   Republicans want instead to cut government spending without tax increases; Democrats, not surprisingly, can't abide the idea of ever cutting the size and scope of government.  

These talks, of course, are all supposedly made more dramatic by the looming deadline for raising the U.S. debt ceiling above its current $14.29 trillion limit.   But this deadline is artificial... it's simply a date when Treasury Department officials -- i.e., the Obama administration -- say that without additional borrowing authority, the government will run out of cash to pay its bills by Aug. 2.   They warn ominously that, if that happens, America will default on its obligations and that could trigger another financial crisis and recession or worse.  

Bull.   There is no need to default on obligations; the federal government has plenty of revenue to service its debt.   It simply has to decide to use it for that purpose, rather than spending it on other things.   Making those decisions might be hard (actually, I don't think it is), but the notion of a "deadline" where the only option is "default" is fiction.  

Here's what I would do if I were Republicans.   I'd immediately pass through the House, which Republicans control, a law stating that the federal government must pay Social Security recipients and members of the military all payments when due, as the government's first priority.   That will keep the Democrats from demogoguing that the GOP is killing granny or starving military families while our boys are overseas.   Then I'd simply call their bluff on the debt limit.   The premise can't be that the debt limit will always be raised; that's a recipe for ultimate disaster.   Now is the time to make the debt ceiling a true ceiling and say "no more."   Then the cuts would have to come, because there would simply not be money there to pay for the massive government we now have.

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