3 Reasons Why The Debt-Ceiling Debate is Full of Malarkey

All anybody in Washington can talk about these days is the debt limit or debt ceiling -- the total amount of money the federal government is authorized to borrow at any given time. After a decade in which spending increased by more than 60 percent in inflation-adjusted dollars and the debt limit was raised no fewer than 10 times, the government is about to max out its $14.3 trillion credit line, leading to fears that Washington is going to default on its bonds, stop cutting Social Security checks, and destroy the economy more than it already has.

But the current debate over the debt ceiling is full of malarkey for at least three reasons.

1. August 2 is a phony deadline. Treasury Secretary Timothy Geithner has pushed back the drop-dead date when the U.S. finally reaches its limit a bunch of times already: March 31, April 15, May 31 were all cited as deadlines before August 2 was inked in as Armageddon. But this time, he means it, man, really.

2. Reaching the debt limit is not the same as defaulting on our debt -- which would indeed be catastrophic.

Think about it: You can max out your credit cards but as long as you keep paying the minimum amount due each month, your creditors don't go crazy. Interest on the debt is a small fraction of total outlays and the government has a series of tools -- from using cash on hand to selling assets to scrimping on nonessential payments -- to make sure interest payments are made and seniors aren't put on an all cat-food diet.

3. Legislating-by-Panic is no way to run a country. The reason we're in this mess is because government can't stop spending. And the government can't even pass a budget on a year's notice. But we're expecting them to come up with a good plan for the country's borrowing in a couple of weeks? Trying to force through an expansion of the country's credit line by promising cuts in spending down the road is exactly why we're in this situation to begin with.

It makes far more sense to do something like sell some TARP assets -- the government is sitting on $320 billion in outstanding direct loans and equities investments -- to cover interest payments through the end of the fiscal year then force Congress and the president to come up with a budget that cuts spending -- and borrowing -- for real, next year, not is some distant future.

For more information, check out Nick Gillespie's 5 Uncomfortable Facts About the Wonderful, Horrible Debt-Limit Debate: http://reason.com/archives/2011/07/08/five-uncomfortable-facts-about

And Mercatus Center's Jason J. Fichtner & Veronique de Rugy's The Debt Ceiling: What is at Stake: http://mercatus.org/sites/default/files/publication/Debt%20Ceilling.deRugy.Fi...

About 2.35 minutes.

Produced by Nick Gillespie and Meredith Bragg, edited by Joshua Swain.

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[eleutheromaniac]

Debt is morphine: you may numb the pain but the reason for the pain doesn't magically disappear.

[Finnbar01]

Problem is though, those TARP assets are probaly worth very little, I would even say worthless.

[Joe11Blue]

@TWSceptic Essentially, what I am trying to say is that you shouldn't count the US out of anything. The people are still very vibrant and determined. The people just need to fix the mess that the last generation let get out of hand in D.C. first. Let the people straighten that shithole out, and everything else will come together again just like it did after WW2.

[Joe11Blue]

@TWSceptic It's not just knowledge required to build CPU's, you need competence and the scientific base to surround it. The amount of research that goes into the the next gen chips grows exponentially with each new one.

I never denied the US was losing ground, I said that you were wrong saying that nothing is made here, and took issue with you saying the US is done. That statement is ignoring the history of this country. The US is filled with talent, and it always can come back..

[Joe11Blue]

@TWSceptic I agree the debt is an issue, but they will solve itself when the credit market finally pops. There can be no recovery until that happens.

I'm not blaming the Unions for anything. I was just pointing out the reasoning for those manufacturers moving back into the US.I'm hardly protectionist, considering I'm an Anarchist that's sort of funny.

[TWSceptic]

@Joe11Blue Well it's true that a lot of the cpu's are still made in the US since it requires specific knowledge typical for a post-industrial service based economy. The problem is that US is losing ground every year, producing less and creating a bigger trade deficit because of lacking production and jobs.

But you don't have to believe me, soon enough this problem will become undeniable for everyone. I'm also pretty sure I can beat that statement LOL.

[TWSceptic]

@Joe11Blue WAS, in other words not anymore. The US is now the greatest debtor nation of the world, where is used to be the greatest creditor nation. And it's not just unions you need to blame. The American people have voted for those who have basically destroyed the US economy in the last decades. I never said the US wasn't the economic powerhouse of the world in the 20th century, especially the first half. Your protectionist ideas are not the solution and never will be.

[Joe11Blue]

@TWSceptic Also to add, I live 10 miles away from the plant where Intel makes it's CPU cores. I live in Arizona. AMD makes most of it's stuff up in Northern New York, I know because I lived about 20 miles away from that plant as well. Are you noticing a trend here? You people? I'm an Engineer that has worked in more countries that you can probably name.

[Joe11Blue]

@TWSceptic The US Economy was driven by you buying American made toothbrushes. It was made by having Heavy Industry, which is you actually paid attention Heavy Industry is moving back into the US. Mainly they are moving to Right to Work states where the Unions do not have a stranglehold on their wages.

[TWSceptic]

@Joe11Blue Dream on. The US economy isn't what it used to be, it's mostly consumption of Chinese goods these days. I use very little American made stuff if any. Obviously internet doesn't just stop with the US neither does banking or anything else. You actually think PC parts are made in the US LOL. Wake up everything is produced outside US. You have a service and consumption based economy nothing more. But it's funny because it shows how you people think about the rest of the world.