‘End of the world’ chest-beating distracts from debt’s deepest dangers
By insisting on the impossibility of disagreement, the president
cheapens his position. He seeks political advantage by spooking the financial markets with hyperbole. The reality is that the $16 trillion private
economy is far more resilient than the arbitrary government deadline
suggests. If Congress and the White House remain in a standoff next
week, and the president doesn't get his way, Gramps and Granny will
continue to get their Social Security check — if the administration
chooses to send it. The Treasury has ample reserves to cover it.
The
math is simple. The federal government expects to collect $2.8 trillion
this year from taxes. Debt service for fiscal 2013, according to the
Treasury Department, amounts to just over $415 billion. The October
interest payment is a relatively modest $13 billion, a consequence of
the current near-zero interest rate set by the Federal Reserve. As long as these interest payments are
made, the loans are in good standing. The nation is not in default. If
the administration does nothing, the earliest the federal government
could miss an interest payment would be Nov. 15. The soonest Social
Security payments could be disrupted is Nov. 1.
That only happens
if the Obama administration deliberately chooses to make it happen. The
federal government has the legal discretion to arrange the order of its
payments. The Social Security Trust Fund can be used to make sure the checks are in the mail. The government even has the last resort, available to
every family: the garage sale. Putting $2 trillion in assets on the
auction block is extreme, but the government has accumulated far too
much real estate, anyway, particularly in the West. It would be a good
thing, for one example, for the federal government to sell the 80
percent of Nevada it owns to private buyers.
The debt-ceiling
debate, or what would be a debate if Mr. Obama gets over his pout and
begins to talk to the Republicans, is kabuki theater meant to distract
from the real problem, Washington's spending addiction. Raising the debt
ceiling through a "clean" continuing resolution would be as
irresponsible as laying in a steady supply of clean needles and smack
for a dope addict.
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Wednesday, October 9, 2013
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