What Happens if We Don’t Raise the Debt Limit?

April/26/2011 16:06PM
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Democrats say it will have devastating effects on Wall Street. They say Wall Street is already pleading for a deal. Some schemers in Congress are using the bait of a Constitutional Amendment to force balanced budgets. Sure, all that takes is passing both houses, Obama to sign, and 3/4 of the states to ratify. Years and years. Why throw this red herring into the mix at this time? To deflect the truth.

If the debt ceiling is not raised, the interest on debt can still be paid. It does not mean we become a credit risk to the world. To the contrary, we are already a credit risk to the world based on the Obama spending spree. Standard and Poor told the world we are becoming a credit risk. Why, because of the debt we are carrying. Standard and Poor says get your house in order. Stop spending and stop borrowing.

So, if the debt ceiling is not raised the country becomes like a major corporation that has tapped out their lines of credit. How does that corporation respond? They don’t stop paying their creditors. They may negotiate terms. But, they keep paying the interest on existing loans.

Then, they sit down and find ways to live with less. They sell assets. They cut staff. They shut down lines of unprofitable businesses. They do not take on new options that cost money, like Libya and Syria. They do not keep dead wood in the organization. They know they need to take bold measures to survive.

The very steps Americans, by 61% in the last poll, say they want. And, believe we will never get from Washington. We never have.

I’m an investor in Wall Street. Would I take the risk of not raising the debt ceiling? You bet. It would be worth it to me to see Congress try to do the work we pay them to do. Not to work on steroids in baseball, but to debate what really gets cut from the budget. Not get elected on a promise to cut the budget, but be forced to really cut the budget. Not to find new ways to spend more money for votes, but to have to cut costs where votes will be lost.

Let it happen? Let’s see how a pack of lawyers deal with what thousands of business executives have had to deal with over centuries. Words don’t work. Only action will get the bills paid. Let’s watch a duplicitous president try to work his demonizing magic to escape any accountability or involvement in the solution. Finger pointing is his forte. It will be good to see the show.

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