Tag Archives: government shut-down

March Will Come In Like a Lion, But Won’t Go Out Like a Lamb

This could be a true bounce-back year for the economy, with the recovery really gathering steam.  Housing, which has been such a drag on GDP for six years, is finally expected to add to GDP, by about 1%.  Just as a downturn feeds on itself and takes us spiraling down, a definitive upturn would feed on itself and lift us up higher and faster.  More consumer spending leading to more jobs, leading to more consumer spending and even more jobs.

But…

The sequester looms on March 1, with the GOP saying they won’t raise taxes and will accept only spending cuts, and the Dems saying there must be a combination of cuts and taxes.   Without an agreement, the automatic cuts will start draining billions of dollars a month from our economy.

And by the end of March, government funding under the continuing budget resolution will run out, and we face the possibility of a government shut down.

So we could quickly and needlessly slide back into recession.

It is ironic that as the private sector comes back, the government-hating GOP may use government power to depress the functioning of the free market and give the “invisible hand” a vicious slap.

But they believe they have to destroy our economy in order to save it.

 

 

 

 

Don’t Be Fooled By All the Loose Talk of Default

I want to quote from a Politico article about the GOP’s willingness to refuse either to raise the debt ceiling or to pass a continuing spending resolution, but before I do, I want to point out that their discussion of default and pretty much all you’re reading and will read about default is wrong.

In order to default, the government would have to stop paying its “public debts,” which means the servicing of our bonds.  The Treasury takes in about $200 billion in taxes every month, which is more than we need to pay those debts.  We can avoid default without raising the debt ceiling, and there is no real reason for financial markets to freak out or for our credit rating to be downgraded.

On the other hand, Social Security payments are not “public debts,” and failing to send those checks is not a default.

If you don’t have enough money to pay all your bills, but you pay your mortgage and your car loan, you may not have enough to heat that house or put gas in that car, but you are not in default on your home or car loan.

From “Double trouble:  House GOP eyes default, shutdown,” Jim VandeHei, Mike Allen, and Jake Sherman, Politico:

“House Republicans are seriously entertaining dramatic steps, including default or shutting down the government, to force President Barack Obama to finally cut spending by the end of March.

“The idea of allowing the country to default by refusing to increase the debt limit is getting more widespread and serious traction among House Republicans than people realize, though GOP leaders think shutting down the government is the much more likely outcome of the spending fights this winter.

“GOP officials said more than half of their members are prepared to allow default unless Obama agrees to dramatic cuts he has repeatedly said he opposes. Many more members, including some party leaders, are prepared to shut down the government to make their point.”