Consequences

Who: Peter Gorenstein
What: "5 Consequences If America Doesn't Raise the Debt Ceiling", Yahoo Finance
When: July 22, 2011

... David Walker -- the former Comptroller General of the United States and head of the Government Accountability Office -- says it's imperative both sides of the aisle find a compromise that also sets conditions to lower our long-term debt and get us back on track. If they don't, the rest of us will pay.

Here's what he says will happen if the federal government can't reach a deal:

1. $4 billion-plus a day will come out of the economy.
2. Government and civilian military workers will be laid off temporarily. That will result in penalties for late payment, to be paid by taxpayers.
3. Social security payments will be delayed.
4. No one knows how bad the reaction will be, but Walker is confident it will be negative for the stock and bond markets and the economy.
5. Interest rates will rise. For every 1% rise in interest rates, taxpayers will be on the hook for an additional $150 billion in debt payments.

There seem to be some in the GOP who actually want these sorts of things to happen. Nate Silver discounts that theory, and reasonably so, though it seems worth mentioning that an associate the other day referred to the prospect of not raising the debt ceiling a chance for the GOP to accomplish something "right and meaningful".

A Fundamental Question: What, exactly, are we doing?

Who: Paul Krugman
What: "Eat the Future", The New York Times
When: February 14, 2011

Republican leaders like to claim that the midterms gave them a mandate for sharp cuts in government spending. Some of us believe that the elections were less about spending than they were about persistent high unemployment, but whatever. The key point to understand is that while many voters say that they want lower spending, press the issue a bit further and it turns out that they only want to cut spending on other people.

That's the lesson from a new survey by the Pew Research Center, in which Americans were asked whether they favored higher or lower spending in a variety of areas. It turns out that they want more, not less, spending on most things, including education and Medicare. They're evenly divided about spending on aid to the unemployed and—surprise—defense.

The only thing they clearly want to cut is foreign aid, which most Americans believe, wrongly, accounts for a large share of the federal budget.

Pew also asked people how they would like to see states close their budget deficits. Do they favor cuts in either education or health care, the main expenses states face? No. Do they favor tax increases? No. The only deficit-reduction measure with significant support was cuts in public-employee pensions—and even there the public was evenly divided.

The moral is clear. Republicans don't have a mandate to cut spending; they have a mandate to repeal the laws of arithmetic.

Strange times.