It’s unfortunate to see this continued level of misunderstanding at the highest level of leadership. John Boehner still thinks we’re becoming the next Greece. A Huffington Post article says:
House Speaker John Boehner (R-Ohio) sees the debt ceiling as an “action-forcing event” where he will insist on cuts greater than the increase, setting up a legislative fight similar to the one that paralyzed Congress last summer.
Boehner calls the statutory debt limit as the “only avenue” to solve “our structural fiscal imbalance,” according to prepared remarks to be delivered at the Peter G. Peterson Fiscal Summit and released to the Washington Post. A Boehner aide told the Post that tax increases are still off the table.
“We shouldn’t dread the debt limit,” Boehner says. “We should welcome it. It’s an action-forcing event in a town that has become infamous for inaction.”
An “action forcing event”? He might as well just say he’s willing to use the US Economy as his vehicle with which to play political chicken. Now, I don’t know what “action” he’s trying to avoid here because the USA is the issuer of the currency in which its debt is denominated….Boehner said:
“This commitment to meet the obligations of the nation, this commitment to protect the creditworthiness of the country, is a fundamental commitment that you can never call into question or violate,”
The USA will have no problem meeting its obligations which are denominated in a currency it can print. There is simply no such thing as not being able to meet these obligations unless the Fed and Treasury forget how to operate their computer systems. The true creditworthiness of the nation is not in whether it can meet its obligations, but in whether it can continue to generate a standard of living that is the envy of the world. And as the currency issuer, it is the responsibility of the government to find that balance where they have supplied the currency users with enough currency to actually be able to do what the American private sector does best – innovate, create and produce. That’s a dramatically different thing than the USA’s mythical Greek insolvency moment (as a USER of the Euro the Greeks have a very real solvency constraint)….And political ignorance like that exposed in Boehner’s comments are in fact contributing to the stagnant living standards we have experienced over the last decade…..