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It’s interesting to note that in the July 31 edition of this paper, Sandy McGarry’s column, “President using fear mongering to address debt ceiling,” accuses President Barack Obama and other Democrats of using scare tactics on the public. I find this ironic since the Republicans had no qualms about using these same kind of tactics during the 2010 elections.
Hopefully, by the time this letter sees print, the debt ceiling will have been raised or extended and much of this letter may be rendered moot.
I wonder how many folks out there are as disgusted with this debt-ceiling business as I am. Both parties are playing a game of political chicken with the consumers/taxpayers tied to the front bumper. And behind the wheel on one side, with the brakes shot all to heck and gunning the engine at full blast, are the tea party extremists yelling at the top of their lungs, “Don’t worry! It won’t hurt...much.”
Conservatives would have you believe that if the debt ceiling is not raised and our nation’s credit rating drops, then the consequences really won’t be all that bad.
Let’s take a look at some of these not-so-dire consequences. Markets could lose faith in U.S. treasuries, putting future investment at risk and hurting U.S. businesses.
If the rate of 10-year Treasury bills went up just 1 or 2 percentage points, it could cause problems. Given the high correlation between mortgage rates and Treasury yields, homebuyers could expect a one-to-one increase in mortgage rates. Interest rates would soar, hurting an already fragile mortgage market, and would continue to soar.
A sell-off in the equity markets could hit retirement accounts hard. Banks could stop lending to each other and to consumers, preferring to hang on to assets rather than risk them by lending.
A sharp decrease in spending by wary consumers could mean that our already weak economy could falter further. The snowball effect could send the economy back into recession.
Stock markets could crash, and the dollar’s value would decline sharply, making it more expensive for U.S. businesses to purchase goods and products from abroad and hurting international travelers.
Economists predict that it could lead to another worldwide financial crash and an even longer recession.
Perhaps the biggest threat to the economy is the psychological factor that would be operating if the debt ceiling isn’t raised. If people felt that the government had become so dysfunctional that it couldn’t carry out its day-to-day responsibilities, then the symbolism could potentially be a lot more damaging in the long term than a missed check.
There. That isn’t so bad, is it?
The information you just read did not come from any politician or political organization. It was collected from other, more reputable sources. A British minister, Business Secretary Vince Cable, told the BBC that it was ironic that “the biggest threat to the world financial system comes from a few right-wing nutters in the American Congress rather than the Euro Zone.”
The debt ceiling has been raised, extended or tweaked 78 times since 1960 – 49 of these changes have occurred during Republican presidential administrations and 29 times under Democratic ones.
Congress could solve this problem in just five minutes with a clean bill. A clean bill would do only one thing – raise the debt ceiling. That’s all. That’s it. This has been done plenty of times in the past, sometimes with a document that was only one page long. There have been times when the bill has been only one sentence long. Congress could do this and lock horns over everything else later.
I would also like to comment on Rudy Schmidt’s letter, “An American fairy tale,” in the July 31 edition. Great job, Rudy. It reads a lot like an analogy accusing the president of all sorts of irresponsible acts. There was was one problem with it. President George Bush hasn’t been president since 2009.
And in related news, the Republican Party announced today that gravity is only a theory.
S.R. Marshall is a Lancaster County