Ok, everybody here already knew that. But if you’re like me and have been watching the debt-ceiling/default reporting – from the financial reporters down to the talking coifs on TV – you’ll agree that they’ve all hit a new low. And their coverage has had real and negative effects on everyday Americans.
I wasn’t the first to question exactly how the USA would “default,” when it takes in tax receipts of $175 billion (the expected August number) and the interest payments due our “creditors” (those holding our debt) is only $29 billion. Doesn’t “default” mean you don’t make a payment a lender by a certain date, as you promised you would?
Now I am a product of our public schools, but I’m pretty sure that $175 billion is more than $29 billion – I mean, it has three numbers instead of two. So why would we default on our obligations, unless some crisis-monger directed the Treasury NOT to pay them?
Oh wait… are those who are crying possible “default” talking about the “$310 in total Federal obligations” that might not be met in August? (Again, I *think* that number is larger than $175 billion… but check my math.) Would those “total Federal obligations” be things like payments to the states for unwanted education programs, subsidies to union-controlled teachers, federal gifts with strings attached, fishing education programs for single mothers? (Yes, we actually had such a program in Minneapolis once.)
So those entitlements can’t be cut or even delayed? And if they are, that constitutes some kind of “default” to ourselves? That isn’t a true default, like the rest of the financial world defines the word.
I’d even bet that there are actually some in the financial sectors who would react positively to a refusal by one of the two parties to increase the USA’s debt burden. They might actually see that some piece of the US government is serious about straightening things out.
Look at the ratings services’ reactions to the news of “the deal.” Reported in the Independent, “Standard & Poor’s had already put the US on notice that it is as likely as not to strip the US of its AAA credit rating in the weeks ahead; Moody’s said last month that while a default would definitely lead to a downgrade, it was also conducting a wider review of American sovereign debt and the safety of US Treasury bonds.” The Dow was up and down today, finally evening out lower.
In other words – the financial world was not impressed. And the trouble is not over. Watch for even more breathless news coverage as the ratings services start looking more deeply into “the deal” and find that we just handed the most irresponsible president in history another blank check of ginormous proportions, with no real plan how to cover it.
The talking heads and talkarazzi will delight in covering the next crisis with their “everything’s-a-sports-game” approach to superficial coverage of the news.
It will be up to us – those whose eyes and ears and brains still function – to suss out the real story and spread the word.