As I have noted again and again, op/eds and reporting at Esquire are so far beyond the majority of what is found at major networks and a good portion of newspapers.
What are you doing for the rest of the summer? If only your plans were as solid as House Majority Leader Eric Cantor‘s. After a relaxing vacation in August, he’s coming back to Washington after Labor Day with one big priority: tank the U.S. economy.
He and House Speaker John Boehner are promising another debt ceiling fight — one of the greatest unforced policy errors of all time — for one simple reason: the best thing about the summer of 2011 was the last one. And what great timing they have, given that all of the economic output killed by the financial crisis has since been regained.
So far this summer, Standard & Poor’s and then Moody’s Investors Service have raised their outlooks on the United States financial situation. S&P says that its outlook is now stable and rates government debt at its second highest level. Moody’s gives the U.S. its highest rating and also says the outlook is stable. The U.S. government remains a risk free borrower but its borrowing authority runs out in September. By refusing to extend it, the Republicans can either force Obama to cut Medicare, Medicaid and Social Security or force the U.S. to default.
Last time around, Obama signed the debt ceiling increase on the day that the Treasury estimated its borrowing authority was about to expire. S&P’s economists were aghast that partisanship had grown so intense that national political figures were fooling with the idea of a U.S. default on its bonds. S&P’s downgrade of U.S. Treasuries didn’t have much of a lasting effect. The Federal Reserve was able to keep interest rates low. The downgrade, which seemed momentous at the time, has itself been downgraded to financial trivia. That’s too bad. S&P’s analysis was spot on. The U.S. government can only default by choice. It can always create dollars to cover its obligations. Only major dysfunction within the halls of power can rob a U.S. bondholder of promised interest or principal payments.
- Moody’s upgrades outlook for US government debt (mercurynews.com)
- Lew Says Congress Must Avoid Last-Minute Drama on Debt Limit (bloomberg.com)
- Fed Keeps $85 Billion Bond Buying Pace, Sees Disinflation Risk – Bloomberg (bloomberg.com)
- Esquire:The Royal Circumcision: To Cut or Not? (esquire.com)
- US Outlook Revised by Moody’s to Stable on Deficit Cuts – Bloomberg (bloomberg.com)