I have written before that the debt ceiling is the only thing that can force fiscal discipline on the federal government. Given that government “revenues” are almost $3 trillion a year, that is more than enough to meet all interest and principal payments on the outstanding federal debt but not enough to cover all government expenditures – hence the continuing and growing deficit. The debt ceiling would force the federal government to prioritize its spending by placing a limit on its ability to continue to borrow. Of course if the debt ceiling is not raised the UA would default but is that necessarily a bad thing. Most people seem to think that a default would mean that the US would default on the interest and principal payments. But that would be a choice made by the Treasury and the president. In reality, there is more than enough to pay on the debt as promised, social security, the military and medicare. What would be missing would be the 25 percent left to pay all government workers and fund all government programs. Thus, the government would default on its obligations to its employees and not to its debt holders. In essence federal workers would be faced with what workers face in the private sector when their employers go out of business. If this is not catastrophic for the private sector then why is this catastrophic for the government? As it now stands, federal workers have been sheltered from facing the consequences stemming from a bloated government making irresponsible decisions. Of course the government will choose to shut down parts of the government that will create the most pain amongst its citizens in order to force the continuation of unlimited largesse. Nonetheless, the day of reckoning is going to come if we continue on the path that we are on. I consider this more irresponsible that the termination of unnecessary spending and growth of the size of the government. I wrote before that the congress should just say "no". I reiterate that plea.
You have probably heard that Ted Cruz and Mike Lee were attacked by some of their republican colleagues in a closed door session over their opposition to Obamacare. The reason you probably heard this is because someone at the meeting leaked the happenings to the press. I give you odds that the leaker was probably Bob Corker. Corker has proven to be no friend of conservatives. He appears to be enamored of his own voice and puts himself before every camera available. I for one am tired of seeing his face in the press and on TV and reading his pious quotes. Since he has been in the senate he has abandoned the principles on which he was elected in favor of “compromise”. He is now the darling of the media and it looks as if he is jockeying to be Obama’s favorite republican senator. Of course there are some here in Tennessee that would argue that Lamar Alexander has that distinction. Once upon a time I wrote that West Virginia had the nation’s worse senators with Jay Rockefeller and KKK Robert Byrd. However, I am beginning to think that Tennessee’s senators are vying for that honor. Kudos to Cruz and Lee for fighting the good fight. By themselves they could not have caused the government “slimdown”. However they are the ones vilified for it. By the way, Have you missed the government? TSA is still at the airports. The off budget agencies are still regulating. The only indicators of the “slimdown” are the shutting down of government websites – how much is the cost of their maintenance – and the silly barricading of government monuments and park closures – obviously intended to just make us mad. So go on with your bad selves Ted Cruz and Mike Lee. I wish you were my senators.
Harold A. Black is professor emeritus in the Department of Finance, University of Tennessee, Knoxville having retired after 24 years of service. He has served on the faculties of American University, Howard University, the University of North Carolina - Chapel Hill and the University of Florida. His government service includes the Office of the Comptroller of the Currency and as a Board Member of the National Credit Union Administration. He also has served on the boards of directors Home Savings of America and its parent company, H. F. Ahmanson & Co., Irwindale, California prior to its merger with Washington Mutual Savings Bank, on the board of New Century Financial Corporation, Irvine, California, then the nation’s largest real estate investment trust and as director and later chairman of the Nashville Branch of the Federal Reserve Bank of Atlanta. He writes an occasional article for the Knoxville News-Sentinel at http://www.knoxnews.com/staff/dr-harold-black/. His web page is haroldablackphd.com