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Obama Seen As Chicken Little On Default
Economists: President is deceiving public about debt ceiling
WND
WASHINGTON — A growing number of economists and politicians say President Obama is just factually wrong when he claims the United States is risking default by not raising the debt celing.
They also say Obama is mistaken in claiming that failure to raise the debt ceiling would be a disaster, or as he put it, “insane, catastrophic, chaos.”
One famous economist even goes so far as to portray the president’s dire warnings as outright dangerous and irresponsible. CNBC’s Lawrence Kudlow accused the president of threatening “to pull the whole system down for (his) own gain.”
No default
Obama has repeatedly insisted that not raising the debt ceiling would mean the United States could not pay the bills it has already accumulated – the payments Congress has already authorized – and would result in a default.
Not true, wrote Jeffrey Dorfman in Forbes.
The University of Georgia economics professor explained, “Reaching the debt ceiling does not mean that the government will default on the outstanding government debt. In fact, the U.S. Constitution forbids defaulting on the debt (14th Amendment, Section 4), so the government is not allowed to default even if it wanted to.”
Dorfman described how, instead of defaulting, if the debt ceiling is not raised in the next two weeks, the government will actually have to prioritize its expenses and keep its spending under the revenue the government collects.
“In simple terms, the government would have to spend an amount less than or equal to what it earns. Just like ordinary Americans have to do in their everyday lives.”
Would increase debt
In addition to threatening an “economic catastrophe” worldwide if Congress does not raise the debt ceiling, Obama has repeatedly insisted raising it “does not add a dime to our debt.”
Also “not true,” wrote Dorfman.
“An increase in the debt ceiling allows the government to continue to run a budget deficit, which by simple accounting means that the national debt will increase. Not raising the debt ceiling does not mean defaulting on the current debt, but rather that no new debt can be incurred.
“Raising the debt ceiling is like having the credit limit increased on your credit card,” he explained.
But that hasn’t stopped the administration from issuing dire threats and predicting impending doom.
“A default would be unprecedented and has the potential to be catastrophic,” a Treasury report said. “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.”
“This is not a deadbeat nation. We don’t run out on our tab,” said Obama, vowing he would not negotiate over the “full faith and credit of the United States.”
Reposted with permission
Regular Americans don’t spend less than or equal to what they make and the government earns nothing. Both run on debt and credit. Dorfman is a duffus and passing on his foolishness is serious chicken littleness.
Are you really serious or just horrible at sarcasm? The government “earns” money through taxing its citizens. Even if you are trying to be intellectual and saying our money is not really money and it is debt notes (which is correct), Dorfman is still correct in that the government can spend less debt notes than it takes in. It is true however that because every debt note is issued with interest which is impossible to pay back because of the Fed’s monopoly, the interest can only be covered by inflation due to the need for an ever increasing money supply, or more debt. So either you didnt articulate your point very well or you really are a little short on rational thought.