Capitol Hill — The US House of Representatives. — © AFP/File
Every time there’s a Democrat president, the Republicans go on the same old sabotage mission with the debt ceiling. “Reducing debt” sounds nice. “Crashing the entire global credit market” doesn’t.
I’ve written about this so many times it’s monotonous. Let’s synopsize the 2023 version of this outdated farce:
- US Federal debt underpins the global credit market. A US default would be catastrophic.
- Those debts are assets for lenders and bondholders. They pay for a functional economy. They pay for government contracts. If those bonds drop in value, so do the finances of every American and the world.
- If the credit market goes into meltdown, your money may not be in your bank. Your stock and other investments could be worthless. Your property won’t sell to people with no credit. …And so on.
Nobody expects Republicans to be literate on any subject anymore, let alone basic business. Not just Americans; the rest of the world gets that, too. This type of illiteracy, however, is likely to be expensively disastrous. Hyperinflation is the least of your worries.
A few pointers:
- A party that seems to think the US government doesn’t need revenue also thinks it doesn’t need debt to raise money to make up the shortfall.
- Republican donors also clearly feel the government shouldn’t have money to spend on doing business with Republican donors or anyone else. That’s what happens if the Fed can’t raise debt. …Unless you’d like to do contracts for food stamps? Oh, no, you couldn’t, could you?
- The US banking sector just got put through the blender because a couple of banks crashed. Banks are hardwired into the global credit markets. What happens if the Federal debt and US credit system crash? Any guesses?
- “Cutting spending” doesn’t mean you don’t have to pay your existing debts.
- In a rising interest rate environment, money is already expensive. This could make it a lot more expensive.
- Losing revenue and not paying debts isn’t a great strategic move. In that sense, not raising the debt ceiling achieves precisely nothing.
- Government debts are legal obligations. They have to be paid. No options. If they’re not paid, borrowing instantly gets a lot more difficult and expensive for the Fed and everyone else.
- The party that has talked about nothing but tax cuts for the last 40 years is wondering why the Fed needs money? What do you think that revenue’s for, soda pop?
- The many-times-blessed trillions of dollars offshore thanks to America’s prehistoric and endlessly compromised tax laws are testimony. That money should have been paid, and be paying tax. Hence the never-ending need to raise debt.
This situation has arisen entirely because a few rich peasants and pseudo-rich illiterates don’t want to pay their fair share and for no other reason. If you don’t have money, you have to borrow.
Yet another totally unnecessary crisis, caused by politics. Thanks so much.
Breaking news: They have now agreed a deal to avoid default. They didn’t really have a choice.
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.