Defending the debt ceiling

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Defending the debt ceiling

Post by swiftfoxmark2 on Mon Apr 04, 2011 9:36 am

Defending the debt ceiling
by Vox Day

Over the 30 years that I have been observing American politics, one thing is perfectly clear. When Republicans stand firm on their purported principles, they win elections. And when Republicans abandon their principles in the name of moderation, or centrism, or pragmatism, or appealing to independents, they lose elections.

This is because Americans respond more positively to political leadership than they do to followership. Chasing the polls is a short-sighted game for fools and renders elected office pointless since there is no rationale for holding office if one intends to accomplish nothing while holding it.

And there is no excuse for Republicans to even consider raising the debt ceiling. None. It is an insult to the electorate's intelligence to claim one could possibly exist when the limit has already been raised 74 times in the last 50 years. Consider the two excuses presently being bandied about by the Republican House leadership:

1) Not raising the debt ceiling will threaten creditor confidence in the value of U.S. treasuries and they may reduce the amount of U.S. debt they are willing to buy.

This argument cannot possibly be true for two reasons, one logical and one economic. On the logical side, increasing the amount of debt also increases the risk that the U.S. will not be able to service its debt, let alone repay it; therefore it is another increase in the debt limit that will threaten creditor confidence. If a bank is already worried about a homeowner's ability to pay his mortgage, is it more or less worried when the homeowner seeks to take out a second mortgage? On the economic side, the law of supply and demand dictates that an increase in supply must lead to either a reduction in price (in this case, the value of the treasuries), or a shortfall in demand.

Since it is the constant expansion of debt over the last 50 years that has led those holding U.S. debt to fear for their investments, it should be obvious that it is raising the debt ceiling, not holding it in place, that will threaten the willingness of investors to continue to hold it.

2) The debt ceiling should be raised one last time to extract spending concessions from the Democrats.

It is this reasoning that has earned for the Republican Party the nickname of the "Stupid Party." Like Wile E. Coyote chasing the roadrunner, some Republicans never seem to learn that deals with Democrats evaporate more quickly than the morning dew under a hot Arizona sun. They have obviously forgotten that the 1986 immigration amnesty that was supposed to be the last immigration deal that would ever be necessary was quickly belied by the fact that it not only didn't stop illegal immigration, but caused it to increase. And they would very much like everyone to forget that they struck this very sort of deal the last time the debt ceiling was raised, only 15 months ago.

The Senate Thursday passed legislation to increase the statutory debt limit to $14.3 trillion, a $1.9 trillion boost, after adopting a pay/go amendment requiring any mandatory spending increases or tax cuts to be offset.

– "Senate approves debt ceiling increase," Congress Daily, Jan. 28, 2010

If John Boehner and the Republican leadership are arrogant enough to think that some nebulous language about a "final," "one-time" or "last-ever" increase in the debt limit is going to fool anyone, much less the tea party, they are truly delusional. And even though the economically illiterate portion of the electorate will likely buy into their claims of threats to the "full faith and credit" for a short period of time, that's not going to do them much good since the truth will rapidly become apparent once the new supply of debt goes onto the market. That should be right around the time the 2012 election kicks off, and there will be no shortage of columnists and political activists willing to place the blame precisely where it belongs: with the Republicans who were elected on the basis of their small government promises and had the power to prevent the raising of the debt ceiling.

To put it bluntly, if the Republican Party is not willing to keep the debt ceiling in place and force the U.S. government to begin living within its means, then there is absolutely no need for the Republican Party.

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