As soon as the Republicans took control of the House, people who know about Washington realised that there was a potential for a major crisis. The necessary increase in the statutory national debt ceiling, which allows the federal government to continue to borrow money, would need to be approved. Normally, says Danny, that presents no problem. The debt limit was raised seven times during the Bush the Younger’s administration. Indeed it is raised all the time, by agreement of both parties.
In Danny’s own words: “Not raising it is simply unthinkable. It would force the United States Treasury to default on its debt obligations....traditionally among the most secure and highly rated in the world. The economy of the United States would implode, and with it, much of the economy of the western world. So the stakes are the highest in the world.....literally!”
So what, you might ask is the problem. Well, try fruit cakes... not literally of course, but it’s an appropriate appellation for people in the so-called Tea Party (which, of course, is not a party at all, but a right wing faction of the Republicans, populated by such nut jobs as Michelle Bachmann), members of which now sit in Congress.
They say no. NO MORE DEBT. It is, as Danny says, ‘religious heresy’ to continue to fund debt.
So the Republican leadership: in the House and in the Senate decided to tell the President that any increase in the debt ceiling must be coupled with huge spending cuts to reduce the budget deficit. And that this must be done by cutting social programmes. Absolutely no new taxes on the wealthiest Americans would be agreed to by Republicans!
President Obama is calling their bluff. He said that he will not cut programmes for the most vulnerable in society while the rich enjoy no tax increases. There will be absolutely NO spending cuts without also increasing taxes on the rich, and corporations. (The GOP wants the social programs that benefit the poorest Americans to pay for it all.) Impasse.
The economies of the West are being held to ransom by people who want to cut the little that is spent on the poorest and the sick, and in many cases may even be stupid enough not to understand what is at stake.
Of course the mainstream Republican Party does understand the implications of allowing the economy to crash and burn...and that the biggest losers in that situation would be...the rich. So Republicans in Wall Street, for example, are telling the leadership to get the situation sorted sharpish.
The very last date for agreement is August 4. I wonder who will blink first.
(Sincere thanks to Danny for his email about this. Parts of the above post are copied directly from it.)
Pics: Michelle Bachmann looking completely mad, and sticking her finger right up that dude's nose. Barack Obama not doing any of that stuff.