Monday, August 01, 2011

Five Big Debt Debate Lies



Transparency: After months of dire warnings about not raising the debt ceiling, the public is still not convinced it's a big deal. Maybe that's because they've been repeatedly lied to about what's at stake.

Even with the clock ticking down, twice as many Americans still say lawmakers should vote against a debt ceiling hike as say they should vote for it. President Obama has said this is because the public isn't paying attention.

Just as likely is that they are paying attention, but have been turned off by the many falsehoods being bandied about — most of them by Obama himself. The five big ones:

Aug. 2 is the drop-dead deadline: This has been the White House line for months, and it's so widely accepted that several news outlets have countdown clocks on their sites. It's not true.

The New York Times on Tuesday reported that the government will have enough cash to pay all its bills until Aug. 10. And Wells Fargo Securities chief economist John Silvia says the debt ceiling won't be hit until sometime in September.

We risk defaulting on the debt: Despite countless warnings, there's zero chance the federal government will default, since each month the government takes in far more in taxes and fees than it pays in interest.

The White House itself, while publicly clanging the default alarm, has been privately reassuring banks that it won't default on the debt, even if the debt ceiling isn't raised.

Social Security payments are at risk: "I cannot guarantee that those checks go out on Aug. 3 if we haven't resolved this issue, because there may simply not be the money in the coffers to do it," Obama claimed earlier this month.

Also a complete fabrication. In June, for example, the government took in more than $250 billion, according to Treasury's monthly report. That was enough to pay that month's worth of interest, plus all Social Security, Medicare, Medicaid and veterans benefits, and all Defense and Homeland Security costs, with billions of dollars left over.

A long-term debt ceiling hike is a must: Democrats refuse to sign a short-term hike, claiming that poses a risk to the economy. "A short-term extension would not provide the certainty the markets are looking for," Senate Majority Leader Harry Reid claimed. Obama has echoed that concern.

But it's a phony connection. For example, Congress raised the debt ceiling 17 times during President Reagan's eight years in office — an average of once every 5 1/2 months — and the economy boomed.

Obama wants a deal: We can't prove this is a lie, but Obama's given every indication that it is. After all, he's done nothing to lead this to a resolution and plenty to disrupt it, all while claiming he wants an agreement. More likely, Obama thinks a debt crisis he can pin on Republicans is the path to victory in 2012.

There's no question that failing to raise the debt ceiling in a timely fashion would be economically disruptive, if for no other reason than that the economy is so anemic it can ill afford any shock.

But it's also clear that, even if Congress misses the Tuesday deadline, the sun will still come up Aug. 3, and many of Obama's big lies will be exposed.

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