Economically Illiterate And Disgracefully Cynical

[Infoproliferati]

Courtesy of The Economist: http://www.economist.com/node/18928600


The Republicans are playing a cynical political game with hugely high economic stakes



IN THREE weeks, if there is no political deal, the American government will go into default. Not, one must pray, on its sovereign debt. But the country will have to stop paying someone: perhaps pensioners, or government suppliers, or soldiers. That would be damaging enough at a time of economic fragility. And the longer such a default went on, the greater the risk of provoking a genuine bond crisis would become.
There is no good economic reason why this should be happening. America’s net indebtedness is a perfectly affordable 65% of GDP, and throughout the past three years of recession and tepid recovery investors have been more than happy to go on lending to the federal government. The current problems, rather, are political. Under America’s elaborate separation of powers, Congress must authorise any extension of the debt ceiling, which now stands at $14.3 trillion. Back in May the government bumped up against that limit, but various accounting dodges have been used to keep funds flowing. It is now reckoned that these wheezes will be exhausted by August 2nd.
The House of Representatives, under Republican control as a result of last November’s mid-term elections, has balked at passing the necessary bill. That is perfectly reasonable: until recently the Republicans had been exercising their clear electoral mandate to hold the government of Barack Obama to account, insisting that they will not permit a higher debt ceiling until agreement is reached on wrenching cuts to public spending. Until they started to play hardball in this way, Mr Obama had been deplorably insouciant about the medium-term picture, repeatedly failing in his budgets and his state-of-the-union speeches to offer any path to a sustainable deficit. Under heavy Republican pressure, he has been forced to rethink.


Now, however, the Republicans are pushing things too far. Talks with the administration ground to a halt last month, despite an offer from the Democrats to cut at least $2 trillion and possibly much more out of the budget over the next ten years. Assuming that the recovery continues, that would be enough to get the deficit back to a prudent level. As The Economist went to press, Mr Obama seemed set to restart the talks.
The sticking-point is not on the spending side. It is because the vast majority of Republicans, driven on by the wilder-eyed members of their party and the cacophony of conservative media, are clinging to the position that not a single cent of deficit reduction must come from a higher tax take. This is economically illiterate and disgracefully cynical.
A gamble where you bet your country’s good name
This newspaper has a strong dislike of big government; we have long argued that the main way to right America’s finances is through spending cuts. But you cannot get there without any tax rises. In Britain, for instance, the coalition government aims to tame its deficit with a 3:1 ratio of cuts to hikes. America’s tax take is at its lowest level for decades: even Ronald Reagan raised taxes when he needed to do so.
And the closer you look, the more unprincipled the Republicans look. Earlier this year House Republicans produced a report noting that an 85%-15% split between spending cuts and tax rises was the average for successful fiscal consolidations, according to historical evidence. The White House is offering an 83%-17% split (hardly a huge distance) and a promise that none of the revenue increase will come from higher marginal rates, only from eliminating loopholes. If the Republicans were real tax reformers, they would seize this offer.
Both parties have in recent months been guilty of fiscal recklessness. Right now, though, the blame falls clearly on the Republicans. Independent voters should take note.


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The economy has never been a Republican strong suit. I'm not surprised.

[ilovedomains]

I am gazing into my crystal ball and I can tell you there will be no default. The future will be as follows...

1. Republicans and Democrats will put on a dog and pony show so the heathens will think government cares about them. At the last minute both sides will continue destroying the middle classs with death by a thousand cuts. This time it will be cuts to your medicare and medicade.

2. Obama will claim screwing you out of your social security was neccesary to save the country from a fate worse than death. The people will be dumb enought to believe it. He will blame those darn republicans.

3. Republicans and democrates will pat themselves on the back for saving the country from disaster, then take a holiday and go play golf together while the people they really serve (their lobbyists) tell them what to cut next.

[lordbyroniv]

Stop with the left/right nonsense

The IMF and the global banking elite run the whole show

U statists that blame repubs and tea partiers miss the whole point

Wake up !!!

[DomainsInc]

Stop with the left/right nonsense

The IMF and the global banking elite run the whole show

U statists that blame repubs and tea partiers miss the whole point

Wake up !!!

why not just assassinate them then? problem solved.

[Gerry]

Courtesy of The Economist:

Please post a link. The way it is posted makes it somewhat difficult to read as a whole.

---------- Post added at 11:42 AM ---------- Previous post was at 11:40 AM ----------

Courtesy of The Economist:

Please post a link. The way it is posted makes it somewhat difficult to read as a whole.

Found

[draggar]

We can rest assured that the people mainly responsible for this mess will make it a top priority to ensure that their own paychecks don't stop.

Maybe if they did a crackdwn on abusers we would save millions of $$.

Also in the news, we're suspending $800M in aid to Pakistan for unrelated issues.

[ilovedomains]

Matt Tiabbi gets it. (Why are comedy shows and rock and roll magazines the only places exposing the fraud the US government has become?)
http://www.rollingstone.com/politics...-deal-20110711

"But what is becoming equally obvious, to both sides, is that the Obama White House is using this same artificial calamity to pitch its own increasingly rightward tilt to voters in advance of the 2012 elections."

[Raider]

Please post a link. The way it is posted makes it somewhat difficult to read as a whole.

Quite humorous to think someone needs a link.

Link! Link! I need a link!

Geez, just turn any tv station, news channel, or news source on the internet.


Remote! Remote! I can't turn the channel without my remote! Well, I can but it requires me to actually get up off my ass and actually press buttons.

Wife! Wife! Child! Kid! Whatever your name is...help me! I'm helpless. Change the channel for me! Enter a URL in a browser for me! Help me! I'm Helpless!


HYPOCRITE