[C38] America Held Hostage
Don Strong
drstrong at ucdavis.edu
Mon May 16 16:49:05 EDT 2011
Steve: You are a naughty boy! Don
On 5/16/11 1:39 PM, Steve Smolinske wrote:
>
> Can we please limit political discussion on the board to only those
> that are favorable to the Republican view point?
>
> *From:*listserve-bounces at catalina38.org
> [mailto:listserve-bounces at catalina38.org] *On Behalf Of *Bill Haynes
> *Sent:* Monday, May 16, 2011 1:32 PM
> *To:* Catalina 38 Listserve
> *Subject:* Re: [C38] America Held Hostage
>
> Paul, you need to read this column for what Paul Krugman says here is
> the honest to God truth.
>
> Bill
>
> May 15, 2011
>
> New York Times
>
> *America Held Hostage*
>
> By PAUL KRUGMAN
>
> Six months ago President Obama faced a hostage situation. Republicans
> threatened to block an extension of middle-class tax cuts unless Mr.
> Obama gave in and extended tax cuts for the rich too. And the
> president essentially folded, giving the G.O.P. everything it wanted.
>
> Now, predictably, the hostage-takers are back: blackmail worked well
> last December, so why not try it again? This time House Republicans
> say they will refuse to raise the debt ceiling --- a step that could
> inflict major economic damage --- unless Mr. Obama agrees to large
> spending cuts, even as they rule out any tax increase whatsoever. And
> the question becomes what, if anything, will get the president to say no.
>
> The debt ceiling itself is a strange feature of U.S. law: since
> Congress must vote to authorize spending and choose tax rates, why
> have a second vote on whether to allow the borrowing that these
> spending and taxation policies imply? In practice, however,
> legislators have historically been willing to raise the debt ceiling
> as necessary, so this quirk in our system hasn't mattered very much
> --- until now.
>
> What has changed? The answer is the radicalization of the Republican
> Party. Normally, a party controlling neither the White House nor the
> Senate would acknowledge that it isn't in a position to impose its
> agenda on the nation. But the modern G.O.P. doesn't believe in
> following normal rules.
>
> So what will happen if the ceiling isn't raised? It has become
> fashionable on the right to assert that it would be no big deal. On
> Saturday the editorial page of The Wall Street Journal ridiculed those
> worried about the consequences of hitting the ceiling as the
> "Armageddon lobby."
>
> It's hard to know whether the "what, us worry?" types believe what
> they're saying, or whether they're just staking out a bargaining
> position. But in any case, they're almost surely wrong: seriously bad
> consequences will follow if the debt ceiling isn't raised.
>
> For if we hit the debt ceiling, the government will be forced to stop
> paying roughly a third of its bills, because that's the share of
> spending currently financed by borrowing. So will it stop sending out
> Social Security checks? Will it stop paying doctors and hospitals that
> treat Medicare patients? Will it stop paying the contractors supplying
> fuel and munitions to our military? Or will it stop paying interest on
> the debt?
>
> Don't say "none of the above." As I've written before, the federal
> government is basically an insurance company with an army, so I've
> just described all the major components of federal spending. At least
> one, and probably several, of these components will face payment
> stoppages if federal borrowing is cut off.
>
> And what would such payment stops do to the economy? Nothing good.
> Consumer spending would probably crash, as nervous seniors started
> wondering how to pay for rent and food. Businesses that depend on
> government purchases would slash payrolls and cancel investments.
>
> Furthermore, markets might well panic, especially if interest payments
> are missed. And the consequences of undermining faith in U.S. debt
> might be especially severe because that debt plays a crucial role in
> many financial transactions.
>
> So hitting the debt ceiling would be a very bad thing. Unfortunately,
> it may be unavoidable.
>
> Why? Because this is a hostage situation. If the president and his
> allies operate on the principle that failure to raise the debt ceiling
> is an unthinkable outcome, to be avoided at all cost, then they have
> ceded all power to those willing to bring that outcome about. In
> effect, they will have ripped up the Constitution and given control
> over America's government to a party that only controls one house of
> Congress, but claims to be willing to bring down the economy unless it
> gets what it wants.
>
> Now, there are good reasons to believe that the G.O.P. isn't nearly as
> willing to burn the house down as it claims. Business interests have
> made it clear that they're horrified at the prospect of hitting the
> debt ceiling. Even the virulently anti-Obama U.S. Chamber of Commerce
> has urged Congress to raise the ceiling "as expeditiously as
> possible." And a confrontation over spending would only highlight the
> fact that Republicans won big last year largely by promising to
> protect Medicare, then promptly voted to dismantle the program.
>
> But the president can't call the extortionists' bluff unless he's
> willing to confront them, and accept the associated risks.
>
> According to Harry Reid, the Senate majority leader, Mr. Obama has
> told Democrats not to draw any "line in the sand" in debt
> negotiations. Well, count me among those who find this strategy
> completely baffling. At some point --- and sooner rather than later
> --- the president has to draw a line. Otherwise, he might as well move
> out of the White House, and hand the keys over to the Tea Party.
>
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--
Donald R. Strong
Professor
Dept. of Evolution and Ecology
University of California, Davis 95616
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