Recently, the bond rating agencies that gave junk derivatives triple-A ratings threatened to downgrade US Treasury bonds if the White House and Congress did not reach a deficit reduction deal and debt ceiling increase. The downgrade threat is not credible, and neither is the default threat. Both are make-believe crises that are being hyped in order to force cutbacks in Medicare, Medicaid, and Social Security.
If the rating agencies downgraded Treasuries, the company executives would be arrested for the fraudulent ratings that they gave to the junk that Wall Street peddled to the rest of the world. The companies would be destroyed and their ratings discredited. The US government will never default on its bonds, because the bonds, unlike those of Greece, Spain, and Ireland, are payable in its own currency. Regardless of whether the debt ceiling is raised, the Federal Reserve will continue to purchase the Treasury’s debt. If Goldman Sachs is too big to fail, then so is the US government.
There is no budget focus on the illegal wars and military occupations that the US government has underway in at least six countries or the 66-year old US occupations of Japan and Germany and the ring of military bases being constructed around Russia.
The total military/security budget is in the vicinity of $1.1-$1.2 trillion, or 70 per cent -75 per cent of the federal budget deficit.
In contrast, Social Security is solvent. Medicare expenditures are coming close to exceeding the 2.3 per cent payroll tax that funds Medicare, but it is dishonest for politicians and pundits to blame the US budget deficit on “entitlement programs.”Paul Craig Roberts is a former Assistant US Treasury Secretary. I would assume he knows something about the economy.
I state that because Bob Somerby can often be informative. But when he's being an ass, like today, thinking he knows something that he doesn't, he really irritates.
Alas! CNN’s transcripts don’t include such exchanges, which instead get dismissed as “news breaks.” But King told Morgan that he would be exploring a claim—the claim that nothing really bad will occur if the debt limit stays where it is.
Amazing! Weeks and months after major Republicans began to pimp this nonsense around, CNN was finally going to get off its ass and examine this foolish assertion!
But so it has gone as our major “news orgs” have pretended to discuss the news in the past few months. Indeed, another major cable show was rushing to catch up with this basic question on yesterday’s program. On Hardball, the hapless regular host, Chris Matthews, was vacationing on Nantucket (we’re guessing). This allowed guest host Michael Smerconish to say that he would examine that long-standing GOP claim.
Paul Craig Roberts says it's not a big deal. That smoke and mirrors is what this is all about. James K. Galbraith argues that as well:
Today this bad-faith law is pressed to its absurd extreme, to force massive cuts in public programs as the price of not-reneging on the public debts of the United States. Never mind that to force default on the public obligations of the United States is plainly unconstitutional. Section 4 of the 14th amendment says in simple language that public debts, once duly authorized by law and including pensions, by the way, "shall not be questioned." The purpose of this language was to foreclose, to put beyond politics, any possibility that the Union would renege on debts and pensions and bounties incurred to win the Civil War. But the application is very general and the courts have ruled that the principle extends to the present day.
What is going on in Congress at this moment already violates that mandate. It is an effort to subvert the authority of the government to meet and therefore to incur obligations of every possible stripe. It is an attack on the concept of government itself -- as the "Tea Party" by its very name would no doubt agree. It therefore paints those deficit hawks who are using the debt ceiling to take budget hostages as enemies of the United States Constitution.
The president, though supposedly a constitutional expert and though sworn to "preserve, protect and defend" the Constitution, will not say this. Instead he appears to treat the Constitution as an optional matter, to which he will not resort, in the hope that by negotiating with the hostage-takers he can reach some reasonable outcome that will preserve everyone's good name. (The great Harvard legal scholar Laurence Tribe recently argued that the president cannot defy the debt ceiling on his own. That's a debatable point.) It is as though Lincoln in 1861 faced with the siege of Sumter had sat down with Confederate commissioners to see what could be worked out.
Galbraith is a noted economist.
Maybe Bob Somerby should turn off the damn TV already and try reading?
"Iraq snapshot" (The Common Ills):