Saturday, July 23, 2011

Understanding the Debt Limit/Deficit Reduction Negotiations

It's a political game of chicken, both sides are still driving straight ahead toward each other. One will ultimately blink, even if there is a delay for a few days.

Democrats say they only want to extend the debt limit once through the 2012 election year, and they want to do it now.

Democrats also want to make tax increases part of the deficit reduction plan.

The Republican plan would result in a two-step process that would put off until next year, in the midst of presidential and congressional re-election campaigns, a tax hike, which would reflect negatively on the President.

A spokesman for House Speaker Bohener says  "a two-step process is inevitable."  Boehner has set  up a deadline. He said he wants a deal, or signs of major progress, before Asian markets open the trading week, which will be at 4:00 p.m. EDT Sunday. It should be noted this is Boehner's deadline, not any deadline written in stone.

As I have written before, in the end, the debt ceiling will be raised, the mad Congress will continue spending more money than is available and Ben Bernanke, with huge inflationary consequences, will be the major buyer of Treasury securities.

Here's Ron Paul explaining why the government should just default now:


  1. Excellent presentation...this ought to be reposted everywhere.

    RP makes the case as well as it can be made, and Cavuto, as always, is informed and respectful..

  2. What is there to understand? Stop applying for more credit cards. Default now, yesterday would be better. Pay the bills now. Go to bankruptcy court. Start over, the geniuses in Washington are straw men without ears. Listen to the people please. As for Dr. Paul, the sooner he goes with a third party the better off we will be. Say good riddance to the Republican Party, useless trash.