Posts tagged Republicans
Do We Need More Political Parties?
Published by NextNewsNetwork
WASHINGTON DC | Possible presidential candidate Rand Paul can’t seem to stay out of the news lately. The Kentucky senator’s latest issue is that he sees a gloomy future for the Republican Party. In a recent interview with neo-conservative radio host Glen Beck, Paul went so far as to say that the Republican Party may never again win a presidential election if it doesn’t broaden its appeal.
That curious statement comes when many of the Republican Party’s most conservative critics have been saying for years that the GOP’s “big tent” is already too big.
These critics have pointed to the gay GOP faction known as Log Cabin Republicans and other realities to underscore their belief that the Republican Party already tolerates so much variety that clearly defining the GOP’s mission is nearly impossible.
However, Paul has a different take on the matter. As we reported in today’s newscast, Paul believes NSA surveillance abuse can help the GOP reach out to young voters who might otherwise side with Democrats. But even so, there is a split in the GOP on that issue, as some Republicans are fine with increased NSA spying in the war on terror.
But looking at the big picture, could it be that America needs more viable political parties? Wouldn’t that be better than stretching the mission of existing parties to the point where their identities collapse?
Switzerland, for example, has at least 12 fully viable political parties. Four or five of those parties are represented in the Federal Council. That executive body has seven members from which a president is annually chosen by the parliament to serve a one-year term. There is no presidential cult of personality and the people settle in whatever party best suits their beliefs.
On the other hand, on President’s Day today, let’s recall the George Washington preferred there’d be no political parties. He felt that voting on principle, on a constitutional basis, was the ideal for America to pursue. But due in part to human nature, political parties took root and have become a force unto themselves. The way money is allowed to oil the political machine is another major reason parties have prevailed over principle.
In the fall of 2012, the new group Free and Equal Elections organized the first-ever nationally televised debate featuring optional presidential candidates from the Green Party, the Constitution Party and other parties. National TV personality Larry King hosted the debate in Chicago.
The debate indicates that a desire exists to break the two-party duopoly. Refocusing the Republican Party’s mission to attract more young people may sound like a worthwhile goal. But perhaps it’s time to exit the two-party box and get more enticing options on the ballot for the voting public.
To keep choosing between Democrats and Republicans may keep the nation captive to entrenched party interests that don’t want real changes for the better.
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GOP Challenging Obama’s Executive Orders?
Published by NextNewsNetwork
WASHINGTON DC | Congressional Republicans may be taking President Obama to court over the executive actions that Obama touted during the Jan. 28 State of the Union speech.
Obama’s overtures to sidestep Congress and pass laws by himself are adding fresh urgency to Republicans’ legal efforts. They say Obama is using his authority in ways never-before seen.
The Hill, a Washington journal, added: “[House] speaker John Boehner said Republicans would not sit idly by as Obama takes unilateral actions like raising the minimum wage for federal contractors to $10.10 an hour.”
GOP Sen. John McCain, an Arizona Republican, noted: “We can go to court. We haven’t got many more options except [to] tell the American people that we’re seeing an abuse of the intent of the Constitution.”
Republicans especially want to legally challenge the president on his Obamacare enactment. The National Security Agency’s spying programs also have made the GOP’s lawsuit list.
Speaker Boehner declared: “We’re going to watch very closely, because there’s a Constitution that we all take an oath to, including him, and following the Constitution is the basis for House Republicans.”
But what WHDT alone dares to ask is this: What’s what the GOP’s sudden ‘constitutional conscience’?
Take Obamacare: If constitutional checks and balances are paramount, then:
· Why did the GOP-led House allow Obamacare to become enshrined in law in the first place?
· And didn’t the 2010 vote to approve the Affordable Care Act lay the groundwork for Obama’s executive orders?
The Hill noted: “GOP lawmakers argue the administration’s selective enforcement of the healthcare law amounts to an unconstitutional exercise of power. They point to [Obama's] decisions to delay health insurance requirements, cap out-of-pocket costs and expand the employer mandate penalty. They are also challenging the healthcare law’s contraception mandate.”
That mandate requires healthcare providers to make contraception available. Eighty-eight lawmakers have signed an amicus brief filed by Senators Roy Blunt of Missouri and Rep. Randy Forbes of Virginia. It argues the Department of Health and Human Services violated the Religious Freedom Restoration Act in implementing the contraception mandate.
· Sen. Rand Paul of Kentucky plans to file a class action lawsuit against the NSA.
And Wisconsin Sen. Ron Johnson has sued the Office of Personnel Management for allowing lawmakers and their staffs to receive federal subsidies for their Obamacare coverage.
Democrats believe Obama is acting within his authority—which is doubtful at best. They say Republican obstruction has left Obama with little choice but to issue executive orders.
The war on terror is a major excuse for continual NSA spying in the first place. Back during the Bush administration, Republicans could have demanded that U.S. troops be brought home. And we’re left to wonder whether the apparently unwinnable wars in Iraq and Afghanistan were worthwhile at all.
Congress can de-fund nearly any program it dislikes through its normal legislative functions. If Congress wanted to de-fund the NSA tomorrow, it could. If Congress does not want Obamacare improperly applied, or doesn’t want it at all, then the GOP would have to bite the proverbial bullet and repeal it.
But instead GOP lawmakers are looking to the courts, rather than harnessing their own legislative powers, to reign in an abusive president.
The very same Constitution they say Obama is abusing was abused by both parties when they launched the war on terror without the Constitutional requirement of Congress declaring war. What followed was a trillion-dollar war which, by its very nature, converted the U.S. into a spy state at home and a perceived bully abroad.
Filing lawsuits makes big headlines. Some of the lawsuits may have merit. But this approach suggests that Congress is the weakest branch of government. The nation’s founders would have expected better. A weaker executive and stronger Congress would be their advice.
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“There is a world of difference between being pro-market and being pro-business. Sometimes, the two positions happen to coincide; often they don’t.”
The Chamber knows the above quote is true. This is why they are going after the small government people running for Congress in 2014. The Chamber just can’t count on the Tea Party folks the way they can count on establishment type Republicans.
See, everything was fine so long as Republicans claimed to be for small government but in reality were not. That tactic has a long history of success. Placate the folks back home with talk of reining in government spending, throw in some rhetoric about how welfare recipients aren’t pulling their weight and taking taxpayer dollars, and then get to Washington and vote for the expansion of government and for ever more corporate welfare. It’s a formula which worked for many years.
What are these small government types thinking? Do they really want to shrink the size of government and to reduce crony capitalism? Oh, we simply can’t have that. We don’t want to be weened!
No one ever does.
(From The Daily Caller)
“In 2014, the chamber will work to protect and expand a pro-business majority in the House and advance our position and our influence in the Senate,” Donohue said. “The business community understands what’s at stake.”
Donohue explained in an interview with Bloomberg, that while he is skeptical of big government, he opposes politicians who have “hitched their trailer to the tea party wagon.”
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By Tyler Durden
The World According To Ron Paul
With 72% of those polled believing “big Government” is more of a problem now than 4 years ago, it is hardly surprising that Ron Paul blasts “the failure of government is all around us” in this brief FOX news interview. Perhaps it is the fact that “Obamacare has been such a trasparent failure of big government,” along with Keynesian economics, and the NSA debacles; that more and more of even the most liberal are realizing just what America has become. “It’s really great news that people are starting to recognize this,” Paul adds, because there is no way to replace the status quo “until people give up on what we have.”
Video capture of FOX News interview with Ron Paul added to original post.
By Peter Schiff
Friday, December 13, 2013
Peter Schiff ~ They Bravely Chickened Out
Earlier this week Congress tried to show that it is capable of tackling our chronic and dangerous debt problems. Despite the great fanfare I believe they have accomplished almost nothing. Supporters say that the budget truce created by Republican Representative Paul Ryan and Democratic Senator Patty Murray will provide the economy with badly needed certainty. But I think the only surety this feeble and fictitious deal offers is that Washington will never make any real moves to change the trajectory of our finances, and that future solutions will be forced on us by calamity rather than agreement.
There can be little doubt that the deal resulted from a decision by Republicans, who may be still traumatized by the public relations drubbing they took with the government shutdown, to make the 2014 and 2016 elections a simple referendum on Obamacare. Given the ongoing failures of the President’s signature health care plan, and the likelihood that new problems and outrages will come to light in the near future, the Republicans have decided to clear the field of any obstacles that could distract voters from their anger with Obama and his defenders in Congress. The GOP smells a political winner and all other issues can wait. It is no accident the Republican press conference on the budget deal was dominated by prepared remarks focusing on the ills of Obamacare.
Although he had crafted his reputation as a hard nosed deficit hawk, Paul Ryan claimed that the agreement advances core Republican principles of deficit reduction and tax containment. While technically true, the claim is substantively hollow. In my opinion the more honest Republicans are arguing that the Party is simply making a tactical retreat in order to make a major charge in the years ahead. They argue that Republicans will need majorities in both houses in 2014, and the White House in 2016, in order to pass meaningful reforms in taxing and spending. This has convinced them to prioritize short term politics over long term goals. I believe that this strategy is wishful thinking at best. It magnifies both the GOP’s electoral prospects (especially after alienating the energetic wing of their party) and their willingness to make politically difficult decisions if they were to gain majority power (recent Bush Administration history should provide ample evidence of the party’s true colors). Their strategy suggests that Republicans (just like the Democrats) have just two priorities: hold onto their own jobs, and to make their own party a majority so as to increase their currency among lobbyists and donors. This is politics at its most meaningless. I believe public approval ratings for Congress have fallen to single digit levels not because of the heightened partisanship, but because of blatant cowardice and dishonesty. Their dereliction of responsibility will not translate to respect or popularity. Real fiscal conservatives should continue to focus on the dangers that we continue to face and look to constructive solutions. Honesty, consistency and courage are the only real options.
In the meantime we are given yet another opportunity to bask in Washington’s naked cynicism. Congress proposes cuts in the future while eliminating cuts in the present that it promised to make in the past! The Congressional Budget Office (which many believe is too optimistic) projects that over the next 10 years the Federal government will create $6.38 trillion in new publicly held debt (intra-governmental debt is excluded from the projections). This week’s deal is projected to trim just $22 billion over that time frame, or just 3 tenths of 1 percent of this growth. This rounding error is not even as good as that. The $22 billion in savings comes from replacing $63 billion in automatic “sequestration” cuts that were slated to occur over the next two years, with $85 billion in cuts spread over 10 years. As we have seen on countless occasions, long term policies rarely occur as planned, since future legislators consistently prioritize their own political needs over the promises made by predecessors.
The lack of new taxes, which is the deal’s other apparent virtue, is merely a semantic achievement. The bill includes billions of dollars in new Federal airline passenger “user fees” (the exact difference between a “fee” and a “tax” may be just as hard to define as the difference between Obamacare “taxes” and a “penalties” that required a Supreme Court case to decide). But just like a tax, these fees will take more money directly from consumer’s wallets. The bigger issue is the trillions that the government will likely take indirectly through debt and inflation.
The good news for Washington watchers is that this deal could finally bring to an end the redundant “can-kicking” exercises that have frustrated the Beltway over the last few years. Going forward all the major players have agreed to pretend that the can just doesn’t exist. In making this leap they are similar to Wall Street investors who ignore the economy’s obvious dependence on the Federal Reserve’s Quantitative Easing program as well as the dangers that will result from any draw down of the Fed’s $4 trillion balance sheet.
The recent slew of employment and GDP reports have convinced the vast majority of market watchers that the Fed will begin tapering its $85 billion per month bond purchases either later this month or possibly by March of 2014. Many also expect that the program will be fully wound down by the end of next year. However, that has not caused any widespread concerns that the current record prices of U.S. markets are in danger. Additionally, given the Fed’s current centrality in the market for both Treasury and Mortgage bonds, I believe the market has failed to adequately allow for severe spikes in interest rates if the Fed were to reduce its purchasing activities. With little fanfare yields on the 10 year and 30 year Treasury bonds are already approaching multi-year highs. Few are sparing thoughts for yield spikes that could result if the Fed were to slow, or stop, its buying binge.
So America blissfully sails on, ignoring the obvious fiscal, monetary, and financial shoals that lay ahead in plain sight. I believe that will continue this dangerous course until powers outside the United States finally force the issue by refusing to expand their holding of U.S. debt. That will finally bring on the debt and currency crisis that we have created by our current cowardice.
Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital, best-selling author and host of syndicated Peter Schiff Show.
Why John Boehner And Paul Ryan Should Immediately Resign
Thomas Jefferson once said that “the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” In other words, he believed that government debt was the equivalent of stealing money from future generations on a massive scale. Right now, the U.S. government is stealing roughly $100,000,000 from future generations of Americans every single hour of every single day. And it is being projected that the U.S. national debt will more than double during the 8 years of the Obama administration. In other words, the federal government will pile more debt on to the backs of our children and our grandchildren during the Obama years than had been accumulated during all of the rest of U.S. history combined. The federal government is literally destroying the future of America, and what we are doing to our children and our grandchildren is beyond criminal. If there was one thing that the Republicans in Congress were supposed to do, it was to do something about all of this debt. These days Republicans can’t seem to agree on much, but the one issue that virtually all “conservatives” were supposed to agree on was the national debt. The American people gave the Republicans control of the House in 2010 and 2012 for a reason. Unfortunately, nothing has been done. Our debt has continued to spiral out of control and now John Boehner and Paul Ryan are pushing a “budget deal” that will essentially give the free-spending Democrats virtually everything that they want for the next 10 years. That is why John Boehner and Paul Ryan should immediately resign.
This “budget deal” actually increases the deficit in the short-term.
Yes, you read that correctly.
Overall, it is supposed to reduce the federal budget deficit by about 20 billion dollars over the next decade. But even if the unrealistic assumptions that those numbers are based upon end up working out (which they never do), the “savings” will average just 2 billion dollars a year over the next decade.
And considering the fact that federal budget deficits will likely average well over a trillion dollars over that time span, that is a complete and total joke.
It is kind of like spitting into Niagara Falls and thinking that it will actually make a difference.
Even Paul Ryan is admitting that “this isn’t the greatest agreement of all time”, and in interviews he is complaining that the Democrats wouldn’t allow him to do more.
As if we are supposed to feel sorry for him.
Look – according to the U.S. Constitution the federal government cannot spend a single penny without the approval of the U.S. House of Representatives.
The Democrats cannot force the Republicans to do anything.
So if the national debt more than doubles during the Obama administration it is the fault of both the Democrats and the Republicans.
Today, U.S. Senator Rand Paul called the proposed budget deal “shameful“, and he was exactly correct.
It is utterly shameful that the Republicans believe that it is just fine to steal more than 10 trillion dollars from future generations of Americans during the Obama years.
It is utterly shameful that the Republicans believe that it is just fine that the U.S. government has accumulated more than 200 trillion dollars of unfunded liabilities that will need to be paid in future years.
It is utterly shameful that the Republicans believe that it is just fine to keep running up a debt that is now more than 37 times larger than it was just 40 years ago.
But instead of doing something to fix this, House Speaker John Boehner is blasting those that are concerned about all of this debt…
House Speaker John Boehner, R-Ohio, who ceded control of the budget talks to Ryan, likewise pushed back on outside groups’ attempts to influence lawmakers. “They’re using our members, and they’re using the American people for their own goals,” Boehner said, “This is ridiculous. Listen, if you’re for more deficit reduction, you’re for this agreement.”
The Democrats don’t even have to attack fiscal conservatives anymore because the Republican leadership is taking care of that job for them.
And John Boehner has got to be joking when he uses the phrase “deficit reduction” in relation to this proposed budget deal. In fact, even CNN is admitting that it essentially does nothing to help our long-term debt problems…
It doesn’t really move the needle much on the country’s long-term debt trajectory. That’s because Ryan and Murray opted for pragmatism, explicitly ruling out wrestling over entitlement and tax reform in this round of negotiations.
Back on September 30th, 2012 our national debt was sitting at a total of 16.07 trillion dollars.
Today, it is up to 17.23 trillion dollars.
That means that we have added 1.16 trillion dollars to the national debt in a little more than 14 months.
This is a recipe for national suicide.
We were the wealthiest nation in the history of the planet, but that was never good enough for us.
We always had to spend even more.
Now we have accumulated the greatest mountain of debt the world has ever seen, and someday if our children and our grandchildren have the chance they will curse us for what we have done to them.
Anyone that has run up massive amounts of credit card debt knows that the ride up can be quite enjoyable. At times, it can seem like the good times will go on forever and that there will never really be any consequences.
But in the end, a very painful day of reckoning always arrives.
The rest of the world is watching what is going on. They can see us running up all this debt. The can see the Federal Reserve wildly printing up money.
At some point the rest of the world is going to stop using our increasingly unstable currency to trade with one another and they are going to stop lending us trillions of dollars at super low interest rates.
When that time arrives, the consequences of decades of very foolish decisions will catch up to us very rapidly.
If only we had listened to our forefathers.
Thomas Jefferson once said that if he could add just one more amendment to the U.S. Constitution it would be a complete ban on all borrowing by the federal government…
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.
How much better off would we be today if we had only listened to him?
This article first appeared here at the The American Dream. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
Image credit: http://endoftheamericandream.com
Debt Ceiling Delusions
The popular take on the current debt ceiling stand-off is that the Tea Party wing of the Republican Party has a delusional belief that it can hit the brakes on new debt creation without bringing on an economic catastrophe. While Republicans are indeed kidding themselves if they believe that their actions will not unleash deep economic turmoil, there are much deeper and more significant delusions on the other side of the aisle. Democrats, and the President in particular, believe that continually taking on more debt to pay existing debt is a more responsible course of action. Even worse, they appear to believe that debt accumulation is the equivalent of economic growth.
If Republicans were to inexplicably prevail, and the federal government were to cut spending so that its expenditures matched its tax revenues (a truly radical idea) the country’s financial mess would be laid bare. The government would have to weigh the relative costs and benefits of making interest payments on Treasury debt (primarily to foreign creditors) or to trim entitlements promised to U.S. citizens. But those are choices we will have to make sooner or later anyway. In fact we should have dealt with these issues years ago. But generations of mechanistic debt ceiling increases have allowed us to perpetually kick the can down the road. What could possibly be gained by doing it again, particularly if it is done with no commitment to change course?
The Democrats’ argument that America needs to pay its bills is just hollow rhetoric. Paying off one’s Visa bill with a new and bigger MasterCard bill can’t be considered a legitimate payment of debt. At best it is a transfer. But in the government’s case, it doesn’t even qualify as that. Treasury debt is primarily bought by the Fed, foreign central banks, and major financial institutions. None of that will change with a debt ceiling increase. We will just go to the same people for greater quantities. So it’s like paying off your Visa card with a bigger Visa card.
According to modern economists, an elimination of deficit spending will immediately cause a dollar for dollar decrease in GDP. For example, if the government stopped sending food stamp payments to poor people, then grocery stores would lose business, employees would be laid off, and the economy would contract. But this one dimensional view fails to appreciate that the purchasing power of the food stamps had to come from somewhere. The government can’t create something from nothing. Taxation transfers purchasing power from people living in the present to other people living in the present. In contrast, borrowing transfers purchasing power from people living in the future to people living in the present. The good news for politicians is that future people don’t vote in current elections (and current voters don’t seem to appreciate the cost to their future selves of current policy).
The Obama Administration has congratulated itself for turning around the contracting economy that it inherited from President Bush. But even if you take the obscenely low official inflation statistics at face value, we only grew at an anemic 1.075% annual pace from 2009 to 2012 (far below the between 3% and 4% that the U.S. averaged post World War II). Sadly, this growth pales in comparison to the accumulation of new debt that we are borrowing from the future.
U.S. GDP is measured at roughly $15 trillion per year. 2% growth means that each year the GDP is approximately $300 billion larger than the prior year. But in the less than five years since Obama took office, the federal government has added, on average, about $1.3 trillion per year in new debt, a pace that is four times higher than the growth. If the deficit were subtracted from GDP, America would be shown to be stuck in a severe recession that Washington can’t acknowledge. But such a reality is more consistent with the dismal job prospects and stagnant incomes experienced by most Americans.
The belief that deficits add to the economy, and that debt can be dealt with in an imaginary future (that never seems to arrive) is the foundation upon which the President can chastise the Republicans as irresponsible suicide bombers. Using this logic, he can argue (with a straight face) that borrowing is the equivalent of paying. That the President can make this delusional argument is not so surprising (no lie too great for the typical politician to attempt). What is alarming is that the media and the public have swallowed it so willingly. As they call for limitless increases in borrowing, Democrats have offered no plan to reduce the current debt and they are unwilling to negotiate with Republicans on that topic. Yet somehow they have been perceived as the party of fiscal responsibility.
While the Republicans have a dismal track record of their own when it comes to budgetary management, it can’t be disputed that the minor dip in that rate of increase in spending that resulted from the recent Sequester, happened only because they dug in on the issue. Without the 2011 debt ceiling drama, there is no chance that any spending would have been touched.
Democrats had warned that the $85 billion in sequestration cuts slated for fiscal year 2013 (about 2% of the Federal budget) would be sufficient to bring on economic Armageddon. But guess what? We survived. Recently, Senate Majority Leader Harry Reid continued with such rhetoric by declaring that there are no more cuts to be found anywhere in the $3.8 Trillion dollar federal budget. (Apparently he missed last week’s 60 Minutes piece on the spreading epidemic of federal disability fraud.)
We have to acknowledge what even the Republicans haven’t fully grasped. We are in such a deep debt hole that there is no solution that does not involve serious economic pain. Tea Party Republicans rightly believe that government spending is a drag on economic growth. As a result, they conclude that immediate spending cuts will help with the “recovery”. But they are confusing real economic growth with the delusional expansion created by deficit spending (which is actually damaging the real economy). If they cut the deficit, this phony economy may likely implode and cause widespread distress.
So even though a reduction in government borrowing and spending does help the economy, it won’t feel very helpful tomorrow. The more we borrow and spend today, the more we will suffer tomorrow when the bills come due. Ironically, cutting government spending now helps the economy by allowing the economic adjustment to happen sooner rather than later. But this type of long-term thinking is very difficult for politicians to consider.
Unfortunately our debts don’t leave us much in the way of choices. We can choose to pay now or try to pay later. But the longer we wait the steeper the bill.
Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital, best-selling author and host of syndicated Peter Schiff Show.
“The real dysfunction is a federal budget that doubled in 10 years”
It’s not that the GOP and the Dems can’t get together on anything that is the problem. It’s that they get together on too much.
Annual federal spending rose by a trillion dollars when Republicans controlled the government from 2001 to 2007. It rose another trillion during the Bush-Obama response to the financial crisis. So spending every year is now twice what it was when Bill Clinton left office a dozen years ago, and the national debt is almost three times as high.
Republicans and Democrats alike should be able to find wasteful, extravagant, and unnecessary programs to cut back or eliminate. And yet many voters, especially Tea Partiers, know that both parties have been responsible for the increased spending. Most Republicans, including today’s House leaders, voted for the No Child Left Behind Act, the Iraq war, the prescription drug entitlement, and the TARP bailout during the Bush years. That’s why fiscal conservatives have become very skeptical of bills that promise to cut spending some day—not this year, not next year, but swear to God some time in the next ten years
Image credit: http://www.againstcronycapitalism.org
12 Very Ominous Warnings About What A U.S. Debt Default Would Mean For The Global Economy
A U.S. debt default that lasts for more than a couple of days could potentially cause a financial crash unlike anything that the world has ever seen before. If the U.S. government purposely wanted to damage the global financial system, the best way that they could do that would be to default on U.S. debt obligations. A U.S. debt default would cause stocks to crash, would cause bonds to crash, would cause interest rates to soar wildly out of control, would cause a massive credit crunch, and would cause a derivatives panic that would be absolutely unprecedented. And that would just be for starters. But don’t just take my word for it. These are the things that top financial experts all over the planet are saying will happen if there is an extended U.S. debt default.
Because they are so close together, the “government shutdown” and the “debt ceiling deadline” are being confused by many Americans.
As I wrote about the other day, the “partial government shutdown” that we are experiencing right now is pretty much a non-event. Yeah, some national parks are shut down and some federal workers will have their checks delayed, but it is not the end of the world. In fact, only about 17 percent of the federal government is actually shut down at the moment. This “shutdown” could continue for many more weeks and it would not affect the global economy too much.
On the other hand, if the debt ceiling deadline (approximately October 17th) passes without an agreement that would be extremely dangerous.
And if the U.S. government is eventually forced to start delaying interest payments on U.S. debt (which could potentially happen as soon as November), that would be absolutely catastrophic.
Once again, just don’t take my word for it. The following are 12 very ominous warnings about what a U.S. debt default would mean for the global economy…
#1 Gerald Epstein, a professor of economics at the University of Massachusetts Amherst: “If the US does default, that will make the Lehman Brothers bankruptcy look like a cakewalk”
#2 Tim Bitsberger, a former Treasury official under President George W. Bush: “If we miss an interest payment, that would blow Lehman out of the water”
#3 Peter Tchir, founder of New York-based TF Market Advisors: “Once the system starts to break down related to settlement and payments, then liquidity disappears, as we saw after Lehman”
#4 Bill Isaac, chairman of Cincinnati-based Fifth Third Bancorp: “We can’t even imagine all the things that might happen, just like Henry Paulson couldn’t imagine all the bad things that might happen if he let Lehman go down”
#5 Jim Grant, founder of Grant’s Interest Rate Observer: “Financial markets are all confidence-based. If that confidence is shaken, you have disaster.”
#6 Richard Bove, VP of research at Rafferty Capital Markets: “If they seriously default on the debt, what we’re really talking about is a depression”
#7 Chinese vice finance minister Zhu Guangyao: “The U.S. is clearly aware of China’s concerns about the financial stalemate [in Washington] and China’s request for the US to ensure the safety of Chinese investments.”
#8 The U.S. Treasury Department: “A default would be unprecedented and has the potential to be catastrophic: credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse”
#9 Goldman Sachs: “We estimate that the fiscal pull-back would amount to 9pc of GDP. If this were allowed to occur, it could lead to a rapid downturn in economic activity if not reversed quickly”
#10 Simon Johnson, former chief economist for the IMF: “It would be insane to default, but it’s no longer a zero-percent probability”
#11 Warren Buffett about the potential of a debt default: “It should be like nuclear bombs, basically too horrible to use”
#12 Bloomberg: “Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.”
A U.S. debt default could be the trigger for the “nightmare scenario” that so many people have been writing about in recent years. In fact, it could greatly accelerate the timetable for the inevitable economic collapse that is coming. A recent Yahoo article described some of the things that we would likely see in the event of an extended U.S. debt default…
A default would upend money markets, destroy bond funds, slam the brakes on lending, cause interest rates to spiral, make our banks insolvent, and deal a blow to our foreign trading partners and creditors around the globe; all of which would throw the U.S. and the world into economic disarray.
And of course stocks would crash big time. Deutsche Bank’s David Bianco believes that if the U.S. government starts missing interest payments on U.S. Treasury bonds, we could see the S&P 500 go down to 850 by the end of the year.
There would be almost immediate panic among ordinary Americans as well. In fact, it is being reported that some banks are already stuffing their ATM machines will extra cash just in case…
With just 10 days left to raise the debt ceiling and congressional Republicans threatening to force the government to default on its obligations, banks are taking some dramatic steps to prepare for the economic chaos that would result should the brinkmanship continue.
The Financial Times reports that one major U.S. bank has started stuffing its automatic teller machines with extra cash in preparation for a possible bank run from panicked depositors. The New York Times reports that another bank is weighing a plan to advance funds to customers who rely on Social Security and other government payments that could stop in the event of a default.
Let’s hope that cooler heads will prevail and that a U.S. debt default will be avoided.
Unfortunately, it appears that the Democrats are absolutely determined not to be moved from their current position a single inch. They have decided to refuse to negotiate and demand that the Republicans give them every single thing that they want.
And who can really blame them for adopting that strategy? After all, it has certainly worked in the past. Whenever Democrats have stood united and have refused to give a single inch, the Republicans have always freaked out and caved in eventually.
Will this time be any different?
The funny thing is that once upon a time, Barack Obama was adamantly against any increase in the debt limit. The following comes courtesy of Zero Hedge…
But now Obama says that it is so unreasonable to be opposed to a debt limit increase that any negotiations are out of the question.
So which Obama is right?
If the Democrats will not negotiate, a debt default could still be avoided if the Republicans give in.
And that is what they always do, right?
Perhaps not this time. Just check out what John Boehner had to say on Sunday…
“I, working with my members, decided to do this in a unified way,” the speaker said — with demands to defund, delay or otherwise alter the Affordable Care Act.
Boehner had expected that the Obamacare fight would come during the next vote to raise the debt ceiling, “but, you know, working with my members, they decided, let’s do it now,” he said. “And the fact is, this fight was going to come, one way or another. We’re in the fight. We don’t want to shut the government down. We’ve passed bills to pay the troops. We passed bills to make sure the federal employees know that they’re going to be paid throughout this.”
“You’ve never seen a more dedicated group of people who are thoroughly concerned about the future of our country,” he said of House Republicans. “It is time for us to stand and fight.”
But will the Republicans really stand and fight?
In the past, betting on the intestinal fortitude of the Republican Party has been a loser every single time.
So we’ll see. Boehner insists that this time is different. Boehner insists that he is not going to fold like a 20 dollar suit this time. In fact, when he was asked if the U.S. government was headed toward a debt default if Obama continued to refuse to negotiate, Boehner made the following statement…
“That’s the path we’re on.”
The mainstream media has certainly been placing most of the blame at the feet of the Republicans, but at least the U.S. House of Representatives has been trying to get an agreement reached. The House has voted 26 times since the Senate last voted. Harry Reid has essentially shut the Senate down until the Republicans fold and give the Democrats exactly what they want.
The funny thing is that this could probably be solved very easily. If the Democrats agreed to a one year delay to the individual mandate, the Republicans would probably jump at it. And because of epic technical failures, hardly anyone has been able to get signed up for Obamacare anyway. So a one year delay would give the Obama administration time to get their act together.
Unfortunately, the Democrats seem absolutely obsessed with the idea that they will not give the Republicans one single inch. They seem to believe that this will be to their political benefit.
But this is a very dangerous game that they are playing. The U.S. government must roll over 441 billion dollars of short-term debt between October 18th and November 15th.
If a debt ceiling increase is not in place by that time, it will send interest rates soaring. Borrowing costs for state and local governments, corporations, and ordinary Americans will go through the roof and economic activity will be hit really hard.
And as detailed above, we could potentially be looking at a financial crash that would make 2008 look like a Sunday picnic.
So let us hope for a political solution soon. That will at least kick the can down the road for a little bit longer.
If a debt default were to happen before the end of this year, that would bring a tremendous amount of future economic pain into the here and now, and the consequences would likely be far greater than any of us could possibly imagine.
Image credit: http://theeconomiccollapseblog.com
Posted September 3, 2013
Matt Drudge Breaks Up With Republicans, Joins Libertarians
“It’s now Authoritarian vs Libertarian,” Drudge tweeted. “Since Democrats vs. Republicans has been obliterated, no real difference between parties…”
Drudge also asks his followers why anyone would still vote Republican. “Who are they?!” he asks. “Raised taxes; marching us off to war again; approves more NSA snooping.”