Here some anecdotal, personal references, which speak to the dire consequences we are likely to face if America defaults on its debt — or even if the world believes our political system is so broken as to even risk it:
One of our friends from China is asking about the debt issue, and is very concerned. He’s an average Chinese person, who spends his time now investing in the Chinese and global stock markets. Right now, he is wondering whether to unload all his U.S. portfolio, stocks and equity investments. Just think about this for a minute… He’s just one of a billion people, investors and foreigners with some vested interest in the health and value of U.S. investments. And he is concerned enough to be considering pulling out completely.
In my travels and business dealings, I meet people from Europe and Asia quite often. Almost immediately after the 2010 elections, and more particularly now, I often get asked the questions: What are your Republican politicians thinking?? What is wrong with them, that they can’t or won’t even work to do their jobs as representatives of the American people?? Are they crazy??
These normal citizens seem to know more about American politics, and today, the risks of U.S. default, more than most of America’s own citizens, or the Republican and Tea Party representatives. On the debt issue, everyone, everywhere else seems to understand how serious it would be, if we were to default on our debt.
As the Great Recession of the past few years have shown us, once banks decided to protect themselves and stop issuing credit, it caused the American and global economy to decline. Why? America cannot function if money and credit are impossible to get. It’s really that simple.
And if the U.S. defaults on its debt, money will become more expensive, credit will cease to exist, and the majority of individuals and businesses will simply be unable to survive. Put another way, which seems to be the only logical explanation for why Republicans and Tea Party politicians would even have allowed us to face this situation right now: Only the most wealthy individuals and corporations will be able to exist, if the U.S. were to default on its debt.
Anyone reading this who thinks we can just shut down the government, and selectively pay our bills, without any serious consequences is sadly – and dangerously – mistaken.
Will America default on our debt? No. But there’s already a growing fear among hundreds of millions of investors, which itself could have serious impacts to the health of our economy, if people lose faith in America’s ability to pay its bills and act responsibly in the area of international finance and corporate governance.
The arguments and political games around this entire fiasco should serve as the most important lesson I believe we Americans have faced since the Great Depression. You don’t have to like the Democrats… but please (for those of you who lean more politically Right), please don’t allow yourself to be duped and distracted by the Republican and Tea Party leaders. What they’re doing on the national and state levels today has no apparent rhyme or reason.
When you add up all the facts, and try to get through all the rhetoric and straw man arguments and distractions, a few things become pretty clear even to the most objective minds: Republican and Tea Party politicians and leaders seem willing to do almost anything to expand their ruling power. The legislative leadership of the Democratic party has proven, once again, that they will do anything to avoid doing anything. And President Obama has shown he is will to do whatever it takes to protect and defend the United States of America.
My prediction is that President Obama will be forced to invoke the 14th Amendment for the first time in U.S. history, because Republican and Tea Party political leaders have so far refused to accept anything less than 100% of their own demands. Section four of the 14th Amendment to the United States Constitution reads: “The validity of the public debt of the United States, authorized by law…shall not be questioned.”
Regardless of whether you agree more with the Right or Left on political issues generally, just think about what’s happening: If the President invokes the 14th Amendment, it would almost surely sacrifice his own political future. The only rational reason is that, all politics aside, he feels the risk and consequences of default would simply be too dire.
Meanwhile, the Right wing cannot point to any compromise they’ve made during this entire process (and most others recently). This alone speaks volumes about their objectives, and willingness to risk everything just to get their way.
What you have here today is a political situation where the Right can strongly defend spending and deficit positions which are popular to their base – but which have nothing to do with America’s obligation to pay its debts. There is no reason to tie spending and budget decisions to America’s obligation to pay its bills…. Bills which, I would remind everyone, expanded more under Republican led executive and legislative power, than Democratic.
Meanwhile, Republicans also know the President cannot allow the U.S. to default. It’s a seeming win-win for Republicans, who get to demand the most excessive and unreasonable actions against Medicare and Social Security, education and any agency that protects Americans, fighting to the death against even a 4% tax increase on the most profitable U.S. corporations (who use loopholes to pay almost no taxes), and the wealthiest 2% of individuals – while they also don’t have to actually worry about defaulting on the debt, knowing President Obama won’t allow that to happen. They’re leaving it up to the President to invoke the 14th Amendment, and then will just as surely turn around and attack him for some supposed violation of the separation of powers. It’s a win-win, over a game that could literally bankrupt America and bring on the worst world-wide Depression ever seen.
The President is keeping the U.S. out of default. The world will continue to have full faith in America’s credit and obligations. My country won’t become a third world nation because all business was forced to close. And Republican Tea Party leaders will be able to claim victory and/or offense – by claiming nothing bad would have happened anyway, even if we had defaulted.
It’s a terrible game they’re playing… but in the end, I’m still left dumb founded at the complete lack of compromise by one political party which does not have the majority of support of Americans. And even when one party does have majority support, it’s never been by a wide enough margin to justify total domination and absolutely no compromise on every issue. You cannot govern only to the interests of only the 48% of people who voted for you, or 20% that support your latest crazy idea. Your job is to protect and defend the United States of America, and to promote the general welfare of all Americans to the best of your ability.
There’s no reason Republicans can’t use the arguments of fiscal responsibility to get all politicians seriously focused on spending. But you can’t use America’s debt obligation to hold the entire discussion hostage. And you also can’t fix our other budgetary problems by simply proposing a big number out of nowhere, which would then be forced from the top down onto effectively you and I individuals at the state levels.
Ross Perot ran for president some years ago as an Independent, and got the biggest number of votes for any Independent , ever. He was kind of a crazy character, and I didn’t agree with a lot of what he said – but one of his ideas has always stuck with me. He said we need to audit the state and federal government, every expense and cost, to figure out exactly where money is truly being wasted, and then organize our needed government agencies to be more efficient.
He didn’t just command, as Rep. Ryan tried proposing earlier this year, that the government shouldn’t take care of our elders or sick, or do any of the things that we Americans have actually asked the government to do for us over the course of 200+ years.
And that makes the most sense. Rather than come up with arbitrary budget numbers, which leaves every agency free to cut actual services and keep only the most wasteful and self-serving aspects of their spending, we really should conduct a bottom up audit that tells us specifically where money is actually being wasted. This would allow us to cut actual waste, and not just allow wasteful agencies (who contributed to our spending mess in the first place) to decide where the fewer dollars should go themselves.
Ross Perot said an audit of this scale and magnitude would cost a few billion dollars, and take several years – but the result of this audit would help America to save trillions of dollars in waste, while also preserving services we Americans want (like food and environmental safety, education and emergency services).
In any case, after this little game has been played out, I’ll be interested in seeing how Republicans fare. Only 20% of America supports that party’s “no-compromise” tactics these days. I absolutely am disgusted by any political party that would rather rule over everyone, than compromise to craft the best legislation and laws possible.
Let’s just hope people remember what’s been happening in recent months, when they go to the polls next year. And let’s hope our friends around the world will hold onto their investments in America, and not lose faith in our ability to pay our bills.