By David Cay Johnston
The author is a Reuters columnist. The opinions expressed are his own.
The Washington debate over whether to voluntarily default on the U.S. government’s obligations revealed a serious political ailment in Congress: mass economic amnesia.
Just 11 years ago, Republicans insisted budget surpluses were bad for the economy, while Democrats told us surpluses would make the economy flourish. Al Gore said pay off the federal debt; George W. Bush said cut taxes so people would have more money.
During the Bush years Democrats decried the red-ink budgets, while Republicans assured us that no real harm would come from a $5 trillion borrow-and-spend spree.
Yet last weekend it was the other way around. The Democrats described a few more years of deficit spending as vital to making up for massive loss of jobs, while Republicans warned that any more red ink would destroy America as we know it. Feeling confused? You should be. And maybe, like the Beijing government, you see the checks-and-balances the framers of the U.S. Constitution put in place to provide sound government replaced by farce.
There is a cure for bad political posture. Just dose yourself with the best elixir ever for manufactured crisis: facts. The posturing in Congress having stretched any sense of reality beyond recognition, here are 10 facts that would have informed the debate on Capitol Hill and can certainly inform your understanding of the federal fiscal follies:
COUNT TO 10
1. No sovereign government with monopoly control of its currency can go broke in its own currency. Since the Constitution gives Congress a currency monopoly it is axiomatic that talk of our government going broke is nonsense unless we have a revolution, in which case federal bonds won’t be worth the electrons used to keep digital track of them.