Averting a looming government default
The public’s mindset right now regarding our fiscal situation is one of anxiety which is being carefully constructed by politicians and the media portraying the absurd notion that without increasing the debt ceiling a default is imminent. There is absolutely nothing further from the truth; in fact it is next to impossible for a default to occur without our Government actively choosing to bring about such default. Regardless of the outcome of the debt ceiling discussions, the Treasury is raising revenue in excess of $2 trillion annually and the interest expense on the debt is about $400 billion. This clearly leaves an excess of about $1.6+ trillion available for other remaining obligations, therefore averting a default takes nothing more than our Government acting responsibly and paying the interest owed before any other disbursements are authorized. It could not be any simpler, the interest should be paid first and then everything else prioritized for the remaining funds with the lower priorities bearing the brunt of any limitations. However, the message being politically orchestrated is that default is to be expected if more debt is not authorized; this can only be true if all other obligations are intentionally prioritized ahead of the interest payments hence creating a default. This deliberately crafted strategy is designed to alarm the public thereby providing the opportunity for manipulating them into acquiescence on the debt ceiling so that the big Government agenda can continue uninterrupted. This is the response chosen by politicians in order to avoid any backlash certain to occur from spending cuts by those that benefitted by such spending. These reductions are going to be painful, but they will definitely not get any easier in the future as the debt level continues higher. If our nation accepts the viewpoint that we are incapable of decreasing spending with $14.5 trillion in debt, how could we possibly believe that it will be more achievable at $17 or $20 trillion? The answer is as obvious as the strategy of shameless propaganda asserting that our Government is unable to prevent a default if they are not allocated more money to waste.
July 27th, 2011 at 11:21 am
Whats a few more trillion dollars. Why not go for a zillion? I hope to be living in my own country by then and printing my own money.
August 8th, 2011 at 7:43 pm
……….As we approach August 2 the deadline for Congress to lift the debt ceiling before the nation begins to default on its credit theres still considerable public confusion about what it all means…While declares that default would be a disaster and a not aligned with the Tea Party agree the country is still sharply divided. The most recent Pew Research Center poll only 40 percent of the public felt it was essential to raise the debt limit while 39 percent of Americans including 53 of Republicans felt that we could go past the August 2 deadline without major economic problems…Why the disconnect?..Part can be attributed to the continuing and growing distrust of Washington politicians particularly by those disaffected on the far right…Much is also due to the esoteric bewildering and sometimes coma-inducing nature of the financial jargon and labyrinthine subject matter associated with the debt ceiling debate…As a Democrat and a former state Treasurer and CFO Im probably not the right guy to convince the partisan-blinder-wearing Ceiling Deniers…But for the rest of us I offer the following straightforward plain-English summary to hopefully help better explain the real-life impact of American credit default ..What is the debt ceiling?..When many Americans hear the term debt ceiling they compare it to the limit placed on their credit cards. Using this analogy it would seem foolish to provide a higher limit to a shopaholic Congress that is already abusing its credit.