right wing politics... And fox, take it with whatever salt you deem
fit. However there seems to be some merit in some of these arguments
___________________________________________________________
Seven Myths About the Looming Debt-Ceiling 'Disaster'
By John Lott
Published July 15, 2011 | FoxNews.com
If Congress and the president don't raise the debt ceiling, the
consequences will be disastrous, politicians and pundits tell us, --
the equivalent of an economic Armageddon. And President Obama warns
that the consequences are so dire that he cannot possibly tolerate any
delay in making an agreement. He announced yesterday that any debt
deal must be completed by today, July 15th.
According to Treasury Secretary Timothy F. Geithner, failure to raise
the debt ceiling limit will cause the United States to default and
"cause a financial crisis potentially more severe than the crisis from
which we are only now starting to recover."
On Thursday, he renewed these warnings. And President Obama alarmed
retired Americans this week: "I cannot guarantee that those [Social
Security] checks go out on August 3rd if we haven't resolved this
issue. Because there may simply not be the money in the coffers to do
it."
But the list of terrible things to come, if the government is stopped
from continued deficit spending, goes on. Failure to raise the
ceiling, it is warned, will dramatically raise mortgage interest
rates, cause housing sales to plunge, create panic on world financial
markets, and destroy the value of the dollar.
Austan Goolsbee, Obama's head of his Counsel of Economic Advisers,
went so far this week as to blame the continued slow economic recovery
on those few politicians who are against raising the debt ceiling.
"[I]t's important we remove this wet blanket of uncertainty that is
permeating the private sector where they don't know that the
government -- there are people actively advocating that the government
declare it's not going to pay its bills," he told MSNBC. Yet, the slow
recovery has been going on for over two years, well before Republicans
obtained control of the House of Representatives.
A new CBS News/New York Times poll finds that Americans oppose
increasing the debt ceiling, by a 69 to 24 percent margin.
Mr. Obama dismissed this finding recently and, as usual, he believes
he knows better. According to him, Americans just don't understand the
complexities of the arguments: "Let me distinguish between
professional politicians and the public at large. The public is not
paying close attention to the ins and outs of how a Treasury (bond)
auction goes. They shouldn't. . . . They've got a lot of other things
on their plate. We're paid to worry about it. . . . Now, I will say
that some of the professional politicians know better. And for them to
say that we shouldn't be raising the debt ceiling is irresponsible.
They know better."
But the general public is right. There is an overload from all the
doomsday predictions. Earlier this year, before the debt limit was hit
on May 21, the Obama administration already used the same scare
tactics.
Here's a look at seven myths that the Obama administration is pushing
on the American people:
1) Not increasing the debt ceiling means the U.S. government will
default on its debt.
This is probably the biggest lie that almost all other claims arise
from. Default occurs if the government stops paying interest on the
money that it owes. Not increasing the debt ceiling only means that
the government can't borrow more money and that spending is limited to
the revenue the government brings in. And, with interest payments on
the debt making up less than a ninth of revenue, there is no reason
for any risk of insolvency.
Time after time, congress and the president have failed to agree on a
debt ceiling increase and still there has been no default. Examples
include: December 1973, March 1979, November 1983, December 1985,
August 1987, November 1995, December 1995 to January 1996, and
September 2007.
Indeed, this really shouldn't even be a point of debate. The 14th
Amendment to the Constitution requires that the debt payments come
first before any other spending.
2) Until the debt ceiling is raised, uncertainty over the payment of
U.S. debts will create chaos in financial markets.
Given that the Constitution mandates U.S. debts be paid before any
other spending and that sufficient money will be available to cover
our interest payments, the only uncertainty arises from Obama's
actions. Will he try not to pay the interest? Even a delay of a day in
paying this interest will create a default. Court action could
eventually force Obama to follow the Constitution but a default would
have already occurred. But there is a simple way to end this
uncertainty: have the president declare now that he will indeed follow
the Constitution and make those payments.
Failure to increase the debt ceiling clearly doesn't mean default.
During one three week period at the end of 1996 and the beginning of
1996, some of the government shutdown when a similar battle over the
debt ceiling occurred, but there was no default. President Clinton
used the revenues that were coming in to pay the interest on the debt.
3) Obama doesn't know if there is money to send off Social Security
checks on August 3.
The president knows very well how much revenue will be available to
send out checks on August 3. Indeed, enough money will be available to
not only pay the interest, but to also cover all Social Security,
Medicare, Medicaid and children's health insurance, defense, federal
law enforcement and immigration, all veterans benefits, Response to
natural disasters. Terrifying elderly people who are dependent on
their Social Security checks may make good politics, but it is
unconscionable. Yet, these scare tactics aren't really very
surprising. The Democrats behaved no differently when they ran
television ads bizarrely depicting Rep. Paul Ryan (R-Wis.) as pushing
an old lady in a wheel chair off a cliff.
4) Mortgage interest rates will rise dramatically if the debt ceiling
isn't increased.
Not true. Indeed, the opposite is more likely, for not raising the
debt ceiling stops the government borrowing more money. Less borrowing
by the government could lower mortgage rates as there would be more
lending available for potential homeowners. The interest rate paid by
the government might go down for a second reason. Just as banks charge
individuals a lower interest rate for those who have less debt
compared to their incomes, the same is true for governments.
5) Time is Running Out on Debt Deal, and it must be done immediately.
Despite Obama's insistence that a deal be completed by July 15 and
Geithner's claim that a deal had to be reached by July 22, as already
noted, there have been many times over the last few decades where
negotiations have extended past when the debt limit has been reached.
The longest delay lasted three weeks. Besides claiming that there will
be a default, no explanation has been offered for why the debate is
any different this time.
Possibly all these claims of urgency are part of some grand strategy
to scare people, but that strategy depends on voters not knowing what
is necessary for a default to occur.
6) If government spending is cut, there will be a depression.
Obama promised that a "temporary" increase in government spending
would "stimulate" the economy, but he is now telling us that we can't
cut that "temporary" increase -- that we are stuck with it.
If Obama's program -- including a 28 percent spending hike since 2008
and more than $4 trillion in deficits -- worked so well, why has our
unemployment rate risen more than elsewhere? The European Union,
Canada, South America, Japan, and Australia have all had smaller
increases in unemployment compared to the U.S. after Obama's
"stimulus." We have also had these shutdowns before and the numbers
don't show any negative impact on unemployment or GDP. Figures for the
longest shutdowns during the fourth quarter of 1995 and the first
quarter of 1996 are available here.
7) The value of the dollar will plummet.
Again, the supposed collapse occurs when we default. But there won't
be any default. In addition, less government borrowing means lower
future taxes, thus making the U.S. a more attractive place to invest.
More foreign investment will actually cause the dollar to rise.
It is time for President Obama and his administration to stop scaring
people. Cutting government spending back to its 2007 level won't be
the end of the world. After all, during the 2008 presidential
campaign, Obama himself repeatedly promised "a net spending cut."
source URL
http://www.foxnews.com/opinion/2011/07/15/seven-myths-about-looming-debt-ceiling-disaster/#
___________________________________________________________
No comments:
Post a Comment