Where we’re at in the debt ceiling debate

June 24, 2011

A few thoughts:

1) Rs had every right to walk out. Dems pushing unacceptable tax hikes (including, basically, axing Bush tax cuts, along with an automatic tax trigger and a host of  tax breaks done away with) with no real entitlement reform.

2) Aug. 2 is a phony deadline because Treasury has 10x as much revenue coming in as debt payments. No reason for default. I have heard Treasury’s counterargument and I just don’t find it persuasive.

3) That being said, Rs (Boehner, McConnell) would LOVE to settle this by Aug 2. Don’t want to risk upsetting financial markets, just as they didn’t want government shutdown. They want to show governing competence to the American people.

4) Obama’s Afghanistan bug out frees up $1.4 trillion over 10 years according to CBO baseline, but those are just the sort of phony cuts Rs should not settle for. Real cuts in discretionary spending along with the Corker-McCaskill spending cap are closer to an acceptable deal.

5) Then there’s this: US economy is not growing anywhere near maximum nor is it optimized for economic growth (taxes, spending, immigration, regulation). If Uncle Sam needs more revenue, we should grow the economy faster.

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