Tuesday, 29 October 2013

Default ain't happening. Spending cuts that terrify US lawmakers would be next up.

Yes, Obama lied about the government defaulting if the debt limit weren't raised.
Doing nothing simply triggers spending cuts.
What a simple way to be Conservative.

John Hinderaker of Powerline explains:

"There is no threat of default.   ..   The federal government must pay its debt obligations, both principal and interest, even if that means prioritizing debt service over other government spending. So the question is, if Congress does not raise the current debt ceiling, will the federal government run out of money needed to pay its existing debts? ..   Interest on the $16 trillion in debt is covered by a factor of about 10x by revenues! That puts the federal government deep into AAA land. Revenues would have to fall by a staggering 90% to jeopardize interest payments.  ..  So what will actually happen if Congress doesn't increase the debt ceiling..? The government’s debt obligations will be paid, but reductions in other spending will start to become necessary. .. Leaving the debt ceiling as is would function as a spending cut. This is why the Democrats hate the idea so much. They know there is zero chance of default, but they are horrified at the prospect that voters and taxpayers may find out that there is a relatively simple way to bring about spending reductions that would create, in effect, a balanced budget."

My take is that Republicans want spending up too, just not quite as lofty.  The lawmakers' power base is the ability to direct wealth to those they favour.  In Canada, the same logic applies to NDP, Liberal and Conservative.    Our consolation is that the current deficit spending is slowing.

How many people believe ending the deficit means the debt is gone?  Dreamers and in the majority, too.

Added:  Being conservative doesn't mean spending cuts and may mean spending increases to protect future benefits but in today's debt-loving politics, spending cuts are a great place to start.

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