Tuesday, July 26, 2011

Warring politicians are playing with fire in US debt crisis

NEVER before has a US president felt compelled to give a nationally televised speech on a matter usually so routine or esoteric.

But these are desperate times: the US government is at grave risk of defaulting on debt for the first time next week because Republicans and Democrats in congress cannot reach an agreement.

The insanity of this situation is that it is totally unnecessary -- and like playing with fire. A default, if it occurs, could trigger a global financial crisis that bears no relation to the economic health of the US government.

This debt crisis has been entirely manufactured by two warring parties putting their government's good credit in jeopardy because of ideological differences over the size and content of federal budgets in future years.

Raising the debt limit is essential to pay for money already spent, not for future spending.

Barack Obama sounded very much like a lecturer yesterday as he sought to woo US voters to support his efforts to break the deadlock. The President is partisan, of course -- he supports the more moderate position of his Democratic Party, which seeks an increase in the debt level in exchange for long-term deficit reduction from both sides of the government ledger: spending and revenue. (more)