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Thursday, October 10, 2013

Governing Through Ungovernability

It's 2011 all over again. House Republicans are once more threatening to force the country into default by not raising the government's debt ceiling. Markets are beginning to get nervous with default only a week away. Fidelity, the country's largest manger of money market funds, has sold off all its government debt maturing in late October and early November.

Unlike 2011, the government is shut down, throwing hundreds of thousands of government workers out of work and reducing gross domestic product by billions of dollars. On the good side, President Obama so far has refused to negotiate over the shutdown or the debt ceiling. Of course, he is haunted by his unforced error of negotiating in 2011, giving us the sequester that even a "clean" continuing budget resolution won't fix.

What we see is the Republican usurping governance of the country by making the nation ungovernable if their demands are not met. They lost the Presidency in 2012, they lost Senate seats, they got fewer votes in the House of Representatives than the Democrats did, but with brilliant gerrymandering they still have a House majority.

Amazingly, the Republicans no longer even seem to know what they want for their hostage-taking. At first it was clear, they wanted Obamacare repealed/defunded/delayed. Now, it appears they just want budget cuts, preferably to Social Security and Medicare. Inadequate as those programs are, they are still central to middle class economic security. We can't give them up.

I'm back to where I can't turn on the TV. I live in fear the President will cave as he did in 2011. But what will it take to actually end the crisis? I'm guessing a huge stock market drop will be required. And I think that's exactly what will happen. What do you think?


  1. Yes. That or we shutdown airports and withhold Social Security payments.

  2. I am _really_ tired of the Default Lie. Please stop it. There is ZERO chance the United States will default.

    Social Security brings in more than enough money to pay all the benefits.

    Medicare has a 5% deficit, but it also has a Trust Fund. Bonds held by that trust fund can be sold back to the Treasury, which will get the cash by selling bonds on the open market. What the Treasury owes to the Trust Fund is part of the debt subject to the statutory limit, so Treasury would just go from owing the Trust Fund to owing the public.

    Taxes other than Social Security and Medicare brought in about $1.6T in FY12, and interest on the debt was $0.4T.

    Interest on the debt is less than 1/4 of the revenues to the feral government. Again, there is ZERO chance of default, so stop with the Default Lie.

  3. "Default" doesn't just mean stiffing your creditors. If you stiff people you are contractually obligated to pay, that is also default. The minute it is unpaid, they are creditors, too. Default is no lie, and no joke.

  4. The feral government is NOT contractually obligated to continue the Department of Education, nor is it contractually obligated to pay welfare and Medicaid.

    Promising your family dinner at a nice restaurant every week, a vacation every year, and a new car every two do not constitute contractual obligations. They are promises. If you cannot afford to full-fill those promises, it is stupid and reckless to try to keep them, and to treat them as contractual obligations in the same way that your mortgage, car payments, and utility bills are. It is stupid and reckless to continually borrow money to pay for your WANTS.

    Even without raising the debt limit, the only reason we would truly default -- not pay our CONTRACTUAL obligations -- is if 0bama decided to do it. There is more than enough money coming in to pay ALL our CONTRACTUAL obligations and more.

    1. Contract law is not the only kind of law there is. Every payment that the government is expected to make is provided for by law. Those laws may not be broken any more than contracts are allowed to be broken. You are just showing us that you favor default as a back door way to cut the safety net, since you don't have the votes in Congress to pass a law reducing their benefits.

    2. So what? The safety net should be cut, and the Department of Education should be eliminated.

      One way or another, it will happen. Either we choose to end the nonsense now, or we wait until we are UNABLE to pay it.

    3. And if I may say so, Contract Law is the only law that incurs CONTRACTUAL obligations which would be subject to "default."

      We must pay the CONTRACTUAL obligations first. The rest is optional.