Over at the New York Post, Charles Gasparino points out that once again, Wall Street’s too-big-to-fail crony capitalists are shilling for the administration in the guise of non-partisan economic analysis for their clients. In this case, they’re lying about the potential impact of a Republican refusal to increase the debt limit, an extension opposed by most Americans. They’re saying, in effect, that refusing to extend equals default, and that just isn’t true.
(No) serious politician in either party is talking about letting the country default on its debt — even if they don’t reach an agreement on raising the debt ceiling by mid-May, when our borrowing will hit the current limit.
Yes, even if Republicans play hardball and refuse to let the country borrow more unless President Obama agrees to more budget cuts, things don’t go boom. A combination of tax revenues on hand, savings from furloughing government workers and a few other measures would certainly allow the richest country in the world to meet its obligations.
So we ain’t Greece just yet.
Yet much of Wall Street is treating imminent default as a serious threat to the country’s, if not the world’s, financial well being. In recent weeks, firms like megabank JPMorgan have been scrambling to issue reports predicting apocalypse unless Congress allows the country to borrow ourselves into oblivion.
Somehow, we’re supposed to see unbridled spending as the responsible course.
Andrew McCarthy pulled together a fine discussion of why we’re not facing imminent default in the Corner recently, including the fact that the country has, in the past, zeroed out the debt limit for up to four and a half months without the world ending. He quotes, among others, Sen. Pat Toomey:
Next year, about 7 percent of all projected federal government expenditures will go to interest on our debt. Tax revenue is projected to cover at least 70 percent of all government expenditures. So, under any circumstances, there will be plenty of money to pay our creditors.
According to Gasparino, Goldman Sachs is also shilling for the president. As for JPMorgan’s report, The Domino Effect of a U.S. Treasury Technical Default:
Morgan boss Jamie Dimon is a committed Democrat. After haggling with the administration over financial reform, he’s now back in the president’s good graces and has even been invited back to the White House for a briefing..and Morgan’s former chief lobbyist, Bill Daley, is now Obama’s chief of staff.
This is the second go-round for these shameless propagandists and government dependents who masquerade as investment experts. As I’ve discussed in the Corner, they’ve also taken pot-shots at Republican plans to trim the budget, using demonstrably nutty numbers that would flunk freshman econ 101. Their current calculations should not be taken seriously.