The debts have to paid at some point, and Republicans don’t seem to understand you can’t live your life on credit and are unwilling to accept a deal that doesn’t entirely represent their far right-wing conservative values. Democrats seem to forget that in order to curb debt you need to curb spending, even in the tough areas.
The sad part is both parties share the blame today when it was in fact 8 years of Republican era economics that erased the tiny surplus the Clinton administration was running prior. People forget about that and will hopefully think really hard come election time who was really responsible for this absolute debacle.
For those who need a refresher the debt ceiling is a cap on the amount of securities the Treasury can issue. The Treasury will issue, for example, short term bills to raise money to pay for government expenses.
Some will say raising the ceiling doesn’t impact past expenses, but the capability of paying for future ones. Others highlight the perpetual cycle of debt accumulation that will inevitably cripple the US economy. Here’s what economists are saying:
- Bruce on the core issue
- How would the govt even stop making the payments it’s supposed to?
- Why the debt ceiling is unconstitutional to begin with, and why this may be a poor legal argument. Another perspective from the Washington Post here.
- Econbrowser on other options: “Congressman Ron Paul (R-TX) is apparently proposing that the U.S. Treasury simply refuse to pay interest and principal on the $1.6 trillion in Treasury securities currently owned by the Federal Reserve. Dean Baker,Greg Mankiw, Steve Williamson, and Stephen Gandel all seem to think it’s not a totally crazy idea. Here’s what I think they’re missing.”
- The capital flow fallacy from Econbrowser
- Expectation on the global finance market if credit ratings fall
- Spending cuts over tax increases? Why?
- Rather than default maybe privatizing assets is the answer?
- Too much debt means economy can’t grow?
- One sided idiocy from Republicans.
- Cantor looking out for #1 (and his rich cronies); taken to task.
- And in case you were wondering the trade deficit rose 7 billion in a month in May…..
If you’re a budding economist then you know economists like models:
No wait, not those: