The Republicans are playing a cynical political game with hugely high economic stakes

[dtotire]

Shame on them

The Republicans are playing a cynical political game with hugely high economic stakes

Jul 7th 2011

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IN THREE weeks, if there is no political deal, the American government will go into default. Not, one must pray, on its sovereign debt. But the country will have to stop paying someone: perhaps pensioners, or government suppliers, or soldiers. That would be damaging enough at a time of economic fragility. And the longer such a default went on, the greater the risk of provoking a genuine bond crisis would become.

There is no good economic reason why this should be happening. America’s net indebtedness is a perfectly affordable 65% of GDP, and throughout the past three years of recession and tepid recovery investors have been more than happy to go on lending to the federal government. The current problems, rather, are political. Under America’s elaborate separation of powers, Congress must authorise any extension of the debt ceiling, which now stands at $14.3 trillion. Back in May the government bumped up against that limit, but various accounting dodges have been used to keep funds flowing. It is now reckoned that these wheezes will be exhausted by August 2nd.

The House of Representatives, under Republican control as a result of last November’s mid-term elections, has balked at passing the necessary bill. That is perfectly reasonable: until recently the Republicans had been exercising their clear electoral mandate to hold the government of Barack Obama to account, insisting that they will not permit a higher debt ceiling until agreement is reached on wrenching cuts to public spending. Until they started to play hardball in this way, Mr Obama had been deplorably insouciant about the medium-term picture, repeatedly failing in his budgets and his state-of-the-union speeches to offer any path to a sustainable deficit. Under heavy Republican pressure, he has been forced to rethink.

MORE:
http://www.economist.com/node/18928600?story_id=18928600&CFID=167297580&CFTOKEN=75168987

[JDPriestly]

1. Why are they cutting Social Security in order to pay off 65% of GDP?

Why aren't they focused on jobs?

Jobs are the issue, not cuts to this program or that.

If they want to cut anything, they should cut the cost-plus military parts of contracts. Companies should be required to provide their services and goods to the US government at a certain cost, not just whatever it costs them.

What an easy scam. Get a cost-plus contract. Buy from a supplier over which you have influence. Get the supplier to raise your costs. Take a cut from the supplier's increased costs -- and voila -- you've pulled a scam that really doesn't even look unusual -- on the taxpayers. And who is to catch you. The military brass could care less. Your contract is just peanuts to them.

[louslobbs]

2. Regrettably, the Republicons have no shame, no conscience and no integrity. They think of only two

things, money and power.
Lou