The current political wrangling in the U.S. Congress over the U.S. debt ceiling is disgusting.
In order for the U.S. to avoid defaulting on its Treasury securities, the U.S. Congress needs to pass a bill to increase the debt ceiling before August 2, 2011. If the Congress does not do so, then there would be catastrophic consequences for the U.S. and hence the global economy. Most economists and informed commentators, I think, are agreed on these propositions. Moreover, in my opinion, it is too risky to experiment and test the contrary views expressed by the minority.
Some stupid suggestions have been made to evade the above analysis and not raise the debt ceiling. Former Minnesota Governor and presidential candidate Tim Pawlenty said the U.S. could continue to pay interest on its securities (a lot of which are held by the Chinese government) and not pay U.S. military personnel and ordinary Americans. Another Minnesota presidential candidate, Michelle Bachmann, has taken a similar position. Even if such absurd actions could avoid adverse reaction in the world market for U.S. securities, which I doubt, who can seriously believe that there would not be a horrendous chain of reactions from our military personnel and citizens?
How can Pawlenty and Bachmann be taken as serious presidential candidates in light of just these stupid suggestions? Yet I read that Bachmann was number one in recent opinion polls of Republicans.
U.S. Senator Mitch McConnell, the Republican leader in the Senate, has admitted that not raising the debt ceiling runs a very high risk of causing disastrous consequences to the U.S. Therefore, he has proposed what is sometimes referred to as “Plan B,” a bill that would allow President Obama unilaterally to raise the debt ceiling for the balance of his term of office. This plan, McConnell crassly admitted, was motivated by his desire not to help President Obama get reelected.
The Republicans’ call for reductions in government spending flies in the face of the elemental formula for Gross National Product: B (business spending) + C (consumer spending) + G (government spending) + E (net exports or exports- imports) = GNP (Gross National Product). Reducing government spending their way will reduce the incomes of many people dependent upon the government and, therefore, probably cause a reduction in consumer spending. Moreover, it is delusional, in my judgment, to believe that reducing government spending will cause an explosive increase in business confidence and spending to counterbalance the reduction in the former. Many corporations already have huge stashes of cash that they are not spending because consumer spending is weak. Consumer spending is weak because of high unemployment, general economic anxiety and reduced consumer wealth associated with declines in home values. In short, reducing government spending the way the Republicans want to do it will worsen our stalling recovery.
Moreover, the Republicans’ call focuses on the smaller slice of the federal budget devoted to improving our deteriorating infrastructure and maintaining the frayed social safety net for our citizens. We the People should be able to see these adverse developments with our own eyes. And those who know something about what is happening in the rest of the world know that the U.S. is falling behind many other countries on many facets of a healthful society.
No one, to my knowledge, is discussing the most important issue, in my opinion, that is raised by the huge and mounting U.S. national debt that needs to be addressed. What is a new U.S. national security strategy that protects the vital interests of our country while vastly reducing the size and global span of the U.S. military? Is the U.S. now in the position of earlier empires whose foreign expenditures to maintain their empires dragged down those regimes?
We the People and all of our elected representatives need to recover the spirit of moderation.
This spirit, said Learned Hand, “is the temper which does not press a partisan advantage to the bitter end, which can understand and will respect the other side, which feels a unity between all citizens–real and not the factitious product of propaganda–which recognizes their common fate and their common aspirations–in a word, which has faith in the sacredness of the individual. . . . [Such a spirit and faith] are the last flowers of civilization, delicate and easily overrun by the weeds of our sinful human nature. . . . They are the fruit of the wisdom that comes of trial and a pure heart; no one can possess them who has not stood in awe before the spectacle of this mysterious Universe; no one can possess them whom that spectacle has not purged through pity and through fear–pity for the pride and folly which inexorably enmesh men in toils of their own contriving; fear, because that same pride and that same folly lie deep in the recesses of his own soul.”
 E.g., Stein, McConnell Debt Ceiling Strategy: “I refuse To Help Obama Reelection,” Huffington Post (July 13, 2011).
 E.g., Krugman, The Lesser Depression, N.Y. Times (July 21, 2011).
 E.g., Thomas Friedman, Still Digging (Dec. 7, 2010).
 Learned Hand, The Spirit of Liberty at 164-65 (3d ed.; Phoenix ed.; Chicago: Univ. Chicago Press 1977).