Thursday, October 10, 2013

What do “shutdown” and “default” really mean?

There would be one reason to prolong the government shutdown and fail to raise the debt ceiling.

Perhaps Americans could learn more about what “shutdown” and “default” really mean.

Obviously “shutdown” does not mean the government isn’t functioning. Let a country attack us and see how quickly we will respond. Plus, it seems the only programs affected are survivor benefits for widows of veterans and food programs for poor children.

Also, failure to raise the debt ceiling by Oct. 17 is not synonymous with “default.”

“Default” would mean the country failed to paying its creditors on time. But how can that happen if daily the government receives 70 percent of the revenue it needs to function from tax revenue pouring into the Treasury?

Wall Street may caution us about turmoil in the markets, but we know that if stocks go down, they will also come back.

“The federal government keeps stumbling from one budget crisis to another, but the damage never sticks,” Bernard Condon wrote for the Associated Press.

“Global investors still see it as the world's best place to park their money. Even the threat of an unprecedented government default doesn't seem to have dulled the allure of Teflon America,” Condon wrote.

Maybe we should test this out so we can all learn about real consequences.

If the Republicans are right about anything — and they are — it is that Congress and President Obama have not seriously addressed the issue of the national debt. Maybe we should see if we can make do with just 70 percent of the revenue we have been spending. Then start setting priorities as we restore the funding.

This is what our government should be doing — scrutinizing and debating all expenses. And yes, if we like the programs, raise taxes to pay for them.

Social Security is the best example. While solid now, long-term adjustments need to be made to maintain the integrity of its trust fund. One thing our leaders could do is stop raiding the trust fund to pay for other parts of the government. But other, common-sense suggestions were made by the National Commission on Fiscal Responsibility and Reform. Use of the so-called “chained” Consumer Price Index to figure increases in Social Security benefits would relatively slightly slow the outflow from the trust fund. Raising payroll taxes on wealthier individuals or reducing  benefits of rich retirees also could lead to significant savings.

These are things responsible lawmakers should insist upon if they are to raise the debt ceiling.

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