Friday, June 24, 2011

The Real Reason Why America Might Default on Its Debt

Yesterday, the Republicans in the House of Representatives engineered a vote against supporting the U.S. role in the NATO operation to assist the rebels in Libya. The same Republican Party that avidly supported George W. Bush's arrogant military idiocy in Iraq just gave aid and comfort to Muammar Gaddafi, a monstrous dictator, sponsor of terrorism, and protector of the Lockerbie bomber. America's NATO allies with military personnel over the skies of Libya must be mystified by the spectacle of America's war-making, union-breaking Republican Party all of a sudden trying to put flowers into rifle barrels. Good thing President Obama is insisting on a troop drawdown in Afghanistan because the Republicans just gave our NATO allies with troops in Afghanistan a convenient pretext for pulling out ahead of us. If we won't support NATO in Libya, why would NATO support us in Afghanistan?

The real reason for the Republican kidney punch is, of course, the extreme partisanship of today's politics. Whatever the Obama administration does, the Republicans oppose. Whatever the Obama administration doesn't, the Republicans advocate. Substance no longer matters. Style no longer matters--the last politicians with any style were Reagan and Kennedy. The only thing that matters is opposing the opponent. The Republicans claim to be seeking adherence to the War Powers Act of 1973. But President Clinton engaged in a much more active air bombardment during the Kosovo War without authorization under the War Powers Act.

A much, much larger issue than Libya is raising the debt ceiling. A default by the United States would be 22.5 on the Richter Scale compared to the 9.0 of a Greek default. But talks between Democrats and Republicans aimed at resolving the debt ceiling problem have broken down. Today, the President is reaching out to Senate leaders in an effort to restart the dialogue. But the right wing hot heads in the House will surely do their utmost to prolong the confrontation. After all, compromise would involve doing something other than oppose, and today's right wing Republicans are a one-trick dog that only growls and drools.

Don't be too quick to sell off your Euro-denominated investments. Even though the Euro bloc is courting longer term financial disaster by kicking the can down the road, its member nations are acting with a modicum of maturity in trying to find short term respite from the Greek sovereign debt crisis. They acknowledge that they're approaching an abyss and are actively trying to avoid belly flopping into it. The Republicans in the House want to use the debt ceiling problem as a vehicle to solve the federal deficit problem, all without any tax increase. This is like trying to send astronauts wearing only gym shorts and t-shirts to Mars on tricycles. The cost of this unyielding right wing onrush into tomfoolery would be the mother of all financial crises. But, given yesterday's House vote on Libya, that just might happen.

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