July 11, 2011
– Comments (1)
Love this: "This coming from officials who haven't been able to put politics aside in missing past deadlines, and were trying to agree on all of this, a big plan, to tackle the deficit just three weeks before default."
I completely agree with Peter in his analysis of the current situation and the disingenuousness of the administration.
I disagree with Peter's advice that we should 'restructure' our debt (a shade of default). I think we should cut government spending tremendously. 40% of all current spending is borrowed (thus the problem with our self-imposed debt ceiliing). We should probably cut 80-85% of government spending. We aren't going to be able to do this, for political reasons, so we ought to cut just the easy half of that, i.e., all 40% should come from cuts in spending. In addition, we should run a small surplus to pay down the debt eventually. 2% would be enough to show the world that we mean business, and thus the rolled over debt would likely NOT be at an enormous penalty interest rate.
Any default of any flavor SHOULD (and maybe will) result in a very high interest rate on any debt we are able to roll over and any new debt beyond the current ceiling. So we mustn't default. Private property rights people have in our debt really are that important to uphold. To do anything less would be just barbaric. The austerity we will have to undergo to accomplish this is less than half of what we ought to enact just to bring back the federal government to somewhere within its constitutional bounds.