wondering about D. Rep. John Spratt's answer on Asia buying US debt

[donsu]

Spratt was on W.J. this a.m. and did well with all the callers but one.

the caller asked about China, etc. buying up our debt.

his answer seemed to be that we would have much higher interest rates if they didn't. and he ignored the part of the question of what would happen if the debts were called in.

he also said he was good to go on more tax cuts.

what's the real deal with this Dem. Rep.

[LSK]

1. more tax cuts?

This is a dem? :wtf:

[slor]

2. Are you sure he supported more tax cuts?

I may have missed that statement, but he seemed genuinely frightened by the deficit, and put part of the blame squarely on the chimp's tax cuts. He sounded like someone that would support targeted tax cuts, to those that need it, and would spend it too. Also, he is right about the interest rates, though he made clear that he was unhappy that we depend on foreign sources to prop us up like that, and I do not think anyone wants to discuss if other countries start calling in their debts.

[napi21]

3. He said he wasn't opposed to more tax cuts, but they had to be offset

with another revenue source. He wants to bring back the PayGo rule.

I wasn't terribly impressed with him, but he wasn't terrible either.

[stopbush]

4. Spratt is usually fab on money issues.

He's right about the higher interest rates. The Chinese are funding our deficit by purchasing our debt, thereby allowing the government to keep operating. That infusion of cash keeps the gov out of the money markets as they don't have to borrow domestically. If they were competing for domestic cash along with the rest of us, then interest rates would rise (you don't want to compete with the Feds on an interest rate when it comes to financing your home).

You're right - if the debts were called in, we'd be screwed. We'd also be screwed if China dumped the dollars its holding on the world market. But neither one will happen in the short-term because 1) China isn't holding a big enough stake at this point to actually "own" the US, only to piss us off if they called in their chits (which would be counter productive), and, 2) dumping dollars would cause the dollar to lose value, thereby hurting China immediately.

I think the "good to go on tax cuts" is Spratt laying down the gauntlet to the Rs to come up with their own offsets (spending cuts).