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Saturday, July 23, 2011

The theatre continues

The House Republicans walk out when Obama refuses to accept their surrender:
President Barack Obama and congressional leaders are scrambling to find a way ahead on a debt deal after House Speaker John Boehner threw negotiations into crisis by walking out less than two weeks before the deadline to avoid a potentially catastrophic default.

A visibly frustrated Obama summoned Boehner, R-Ohio, to the White House for a Saturday morning meeting with the three other leaders - Sens. Harry Reid, D-Nev., and Mitch McConnell, R-Ky., and Rep. Nancy Pelosi, D-Calif.

"We have run out of time and they are going to have to explain to me how it is that we are going to avoid default" on Aug. 2, the president told reporters at a hastily scheduled news after Boehner's announcement.
The media coverage of the debt ceiling issue has really been abysmal. There is absolutely no more threat of U.S. default in August than there was yesterday or than there is today. If Obama elects to default by deciding to pay for the occupation of Afghanistan or sending out Social Security checks instead of paying interest on the debt, it is no more unavoidable or necessary than a default by a private individual who decides to buy a new car instead of paying his mortgage and credit card bills.

There is a perfectly good case to be made for strategic default, especially considering how much U.S. debt is owed to its self-appointed enemy of the future, China. But it is a blatant and shameless lie to claim that a failure to reach an agreement on raising the debt ceiling, or even a budget, means that a default cannot be avoided.

It shouldn't be hard to explain to Obama how to avoid a default. First, you collect tax revenues. Second, you pay the interest on the outstanding debts. Third, you pay for your various spending programs with whatever money you have left. Since interest was only $197 billion in 2010 and tax revenues were $2,162 billion, it is mathematically obvious that any default can only be an intentional and strategic one, the protestations of politicians notwithstanding.

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