Theoretically you can expand government debt to the extent that it’s balanced against economic productivity. The current rate of government debt being “expanded” exceeds that level meaning it’s happening at a higher rate than economic growth. Obviously working with no debt is the optimal state by which government should be financed. It doesn’t produce anything to ad value to the economy, therefore it actually has to take value from those forces which produce value in order to spend. In other words, excessive government spending could come home to bite. What’s helping us now is the fact that people are willing to invest in our bonds despite the unattractive interest rates, which we control to some degree. That doesn’t mean that will always be the case. President Obama and the Democratic Leadership have adopted a laissez faire approach when it comes to government spending. They just don’t care if it hurts our country. I think pretty much all of us would agree that’s not the responsible way to run our government. On the other hand, default isn’t either. Republicans took their battle to that point. There could easily have been consequences for a default despite any type of ideological battle to be fought. It could result in inflation, our credit being dinged, and it would have an adverse impact on the financial sector; including money markets and the banking sector. A government default would not have a positive outcome and that’s what Republicans wanted to avoid. That’s also why they didn’t take it to the brink. However, as long as we act “as a house divided against itself,” attacking each other instead of the problem, we’re only hurting ourselves. That’s what we need to change so our strategy comes into better focus. You know, you take a guy like Dan Benishek, who basically agrees with us on Government spending, welfare reform, and family values, attacking him for making what might be the right decision under the circumstances is counter-productive. Hes on our side. God Bless
Posted on: Wed, 15 Jan 2014 18:20:16 +0000
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