Let's not mince words here, by any standard the current incarnation of the Republican Party - hostages that they are to deranged maniacs that rival al Qaeda (in financial terms) - are terrorists pure and simple. They are prepared to blow up our entire economy if they don't get 100% their own way. That is to say, a deal that raises no new taxes and only embraces spending cuts - ranging from $1.5 trillion (The McConnell solution) to $3.7 trillion (the new 'Gang of Six' solution).
In either of these cases expect the U.S. economy to likely be saved from default (given the Rs have had a gun to the head of the country for over 2 months) but to go into the economic crapper as soon as the cuts begin. Even now, it isn't clear the Tea Party maniacs will accept even these 'heads you lose, tails I win' deals - since they regard McConnell as a "lily livered sellout" (to quote one TP in today's WSJ) and regard the 'Gang of 6' solution as anathema because some 26% of it is tax increases.(But not real tax increases, merely closing some loopholes for the wealthiest and letting some of the Bush tax cuts expire next year- mainly for the top 0.0001% income earners, making $1.5 m or more each year.)
To hear Tea Bagger Nation tell it,they'd prefer the GOP let the default happen, wrecking the good name of the country. These morons actually believe it's no biggie, and all will be well in the aftermath. But what do you expect from economic retards? Okay, let me qualify that, Reep-tards!
In actual fact, the situation is simple: $172 billion will come into U.S. treasury coffers by the debt ceiling increase due date (Aug. 2) and there will be $306 billion in bills due at the same time. There are no good options here, and any fools who disbelieve in zero sum mathematics had best transport themselves to Oz and join the Munchkins on the Yellow Brick Road.
By Option 1 we can pay off the Treasury bills' interest to bond holders (i.e. those who've already lent us trillions, like the Chinese - to fund our stupid military adventures) and also pay recipients of Social Security, Medicare, Medicaid and unemployment benefits. By now, you've paid out $172.6 billion which is all the money you have.
This means you can't pay for: troop salaries (they'll have to depend on care kits from home), VA issues and demands, federal worker salaries, EPA or IRS refunds. Making it even more catastrophic, we will need to roll over $500 billion in maturing bonds, or face no more loans from those stiffed bond holders, period.
By Option 2, all defense contractors are paid and VA benefits, claims settled, as well as enabling congressional yearly pay raises, federal workers' pay, HUD, IRS refunds, and the usual corporate welfare subsidies (about $33 billion/yr) ...but granny and gramps don't receive their Social Security or Medicare benefits.
Option 3 allows the debt ceiling to increase, but only at the cost of capitulating to GOP extortion by allowing massive incremental spending cuts that will cripple the economy (by attacking the already weak aggregate demand) and engendering massive unemployment ...even as Social Security is transitioned to a "chained CPI" COLA basis - assuring gramps and granny are stuck on cat food the rest of their days, while food stamps beneficiaries will see their benefits cut ...and they and their kids will likely go hungry.
Bear in mind most of these recipients are working, not slackers, it's just that their pay can't cover all their needs which is disgraceful. According to The Economist (July 16, p. 29) only 14% of food stamp households have incomes above the poverty line. The average family has only $101 in savings. Last year food stamp expense rose to $65 billion from $35 billion in 2008. Most GOP spending cut proposals want to cut this in half - or back to 2008 levels, despite the fact that nearly twice as many people need them. So unless they can find jobs that pay for their food, we can expect tens of millions, more than half children, to suffer hunger and malnutrition.
Meanwhile, the Repukes' preservation of tax cuts for the wealthiest will mean they can keep on purchasing new Bentleys, 100k blood diamonds...or the latest craze...matching his and hers gold-embossed toilets for every bedroom in their 14-room haciendas.
Why ordinary working people keep voting for these slime is beyond me.
As I said, Terrorists!
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