I want to make a point I feel has been largely absent from all the debt ceiling hysteria posts around the Internet. And that is, we are pretty much fucked all the way around.
Naturally, the worst option is default. While no one actually knows what will happen, I believe it's safe to say that "catastrophic" will suddenly be insufficient. While noting the ludicrous amount of doublethink involved in the Republican's position that incurring debt is inviting economic stagflation and death while defaulting on said debt will bring no ill consequence is slightly amusing; it stops being funny really really quickly.
But what of the various deficit reduction plans being introduced and rejected almost daily at this point? Well, the UK gives us a rather nice vision of the future. Last year, after David Cameron and his Tories gained control of Parliament on the platform of cutting irresponsible government spending and the debt that came with it (Sound familiar?), he proceeded to do just that. Cameron's budget cut 83 billion pounds ($136 US) from the government on the grounds that doing so would open the way for businesses to start spending and start hiring(again, sound familiar?). So that played out well, right? No, no it didn't. At this time last year, the UK's economy was growing at a rate of 2.5% of GDP. According to the new figures, the growth rate is now 0.2% of GDP. Now realize that the smallest proposed deficit reduction plan is 2.5 trillion dollars and just let the coming lost decade years mentally wash over you.
Of course, for (false) hope we can turn to the "Constitutional Option", originally proposed by Bruce Bartlett. The grounds for this idea rests largely on two points. One, that a clause in the 14th Amendment states that "The validity of the public debt of the United States... shall not be questioned." So basically, it's UnConstitutional to default on our debt. The second point is that since a raise in the raise in the debt ceiling is needed to cover legal obligations, Congress cannot, again under the 14th Amendment, retroactively invalidate preapproved debt. Since no one has ever been stupid/crazy enough to risk national default, there is no precedent for how this clause can be used to pay our debts or who even has the authority to use it. If this reminds you of a get out of jail free card, that's because it kindof is.
So here we are, a possible UnConstitutional act or definite economic disaster/shutdown. I'm for whatever fucks us gently
Naturally, the worst option is default. While no one actually knows what will happen, I believe it's safe to say that "catastrophic" will suddenly be insufficient. While noting the ludicrous amount of doublethink involved in the Republican's position that incurring debt is inviting economic stagflation and death while defaulting on said debt will bring no ill consequence is slightly amusing; it stops being funny really really quickly.
But what of the various deficit reduction plans being introduced and rejected almost daily at this point? Well, the UK gives us a rather nice vision of the future. Last year, after David Cameron and his Tories gained control of Parliament on the platform of cutting irresponsible government spending and the debt that came with it (Sound familiar?), he proceeded to do just that. Cameron's budget cut 83 billion pounds ($136 US) from the government on the grounds that doing so would open the way for businesses to start spending and start hiring(again, sound familiar?). So that played out well, right? No, no it didn't. At this time last year, the UK's economy was growing at a rate of 2.5% of GDP. According to the new figures, the growth rate is now 0.2% of GDP. Now realize that the smallest proposed deficit reduction plan is 2.5 trillion dollars and just let the coming lost decade years mentally wash over you.
Of course, for (false) hope we can turn to the "Constitutional Option", originally proposed by Bruce Bartlett. The grounds for this idea rests largely on two points. One, that a clause in the 14th Amendment states that "The validity of the public debt of the United States... shall not be questioned." So basically, it's UnConstitutional to default on our debt. The second point is that since a raise in the raise in the debt ceiling is needed to cover legal obligations, Congress cannot, again under the 14th Amendment, retroactively invalidate preapproved debt. Since no one has ever been stupid/crazy enough to risk national default, there is no precedent for how this clause can be used to pay our debts or who even has the authority to use it. If this reminds you of a get out of jail free card, that's because it kindof is.
So here we are, a possible UnConstitutional act or definite economic disaster/shutdown. I'm for whatever fucks us gently