I just read a short piece ---see the link below:
4 Ways to Avert the Debt Ceiling (and the Most Likely Option Is the Scariest) - Atlantic Mobile
Remember that the debt ceiling problem is not the same problem as being unable to pay for a deficit. The US could easily issue bonds to pay for the debt created by current US government obligations. The debt ceiling however has been reached so no more bonds can be printed until the ceiling is raised or current obligations reduced. One idea being floated is that of prioritization---the feds could prioritize their debts so that they pay only the most critical 60%, thus defaulting on the rest.
So current bargaining appears to lead to this:
Now it's a psychological game of chicken, with Obama and Republicans accelerating toward the other, each convinced they cannot swerve, and when they meet in the middle, they'll set off the mother of all global market crashes.
I believe the IOU strategy to be the 'best bad' idea on that article. California did this in 2009, and now they have a budget surplus for the first time since before the recession. Yes, it would technically be illegal for the time being, but its nothing some new financial language wouldn't fix.
ReplyDelete"Obama says there's nothing he can do to lift the debt ceiling on his own; that's it up to Republicans to pay the country's bills; and that if they don't, they will get blamed for Social Security checks not going out." ...This seems kind of childish to me. If current bargaining is left to a game of chicken, who knows where the debt will end up. I'd like to see the Republicans and Obama to work more as a team, compromise, but it doesn't appear it will happen that way. I agree with Andrew that the IOU strategy might be the only okay choice in this article. Since this has proven to have a positive effect on California, maybe it isn't a bad idea to try it on a bigger scale. Although its illegal, its better than playing a game of chicken and placing the blame on one another. This will actually make everyone come to a decision.
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