The Debt Ceiling Conspiracy; don't let Doomsday Politicians scare you

Beware the false prophets of the debt-ceiling

With the Deadline just around the corner, President Obama, Treasury Secretary Geithner, Doomsday Democrats and conspiring Republicans warn of economic meltdown if these Spoiled Brats don't get their way on time.

But are the American people buying what they're selling?

Voters are realizing what Washington doesn't want to cop to; that this whole debt crisis stems from THEIR compulsive spending problem. According to a new Gallup poll, among Americans who follow the debt-ceiling debate "very closely," 53 percent oppose increasing the limit! Only 37 percent favor an increase. Apparently, the majority of Americans now realize the extent of fear-mongering going on in Washington.

Regardless to what the Doomsday Politicians in Washington say, not raising the federal debt ceiling does not automatically trigger default. The debt limit only caps the amount of debt the US Treasury can issue.

"A de facto shutdown of the government is the real threat, not default, " says Greg Valliere, chief political strategist for the Potomac Research Group.

The Treasury still has the option to prioritize payments to bondholders and sell assets, such as gold and TARP funds, to avoid default. The debt interest payments only total $214 billion for 2011, which is less than 10% of $2.2 trillion in expected tax revenue this fiscal year. So what's really going on?

Obama claims that seniors may not receive their Social Security checks for August. This would only happen if our government maliciously decided to do just that, because there is in in no way, shape or form the NEED to to this, considering that the program's annual cost is only $727 billion, which only comes to 33% of the revenue. No one, not Democrats and Republicans wants to see TV screens fill with interviews of outraged seniors. Nor is anyone foolish enough to want to face the political consequences of cutting them off. So count on Social Security payments to take second priority when it comes to cutting checks.

The Doomsday Politicians would also like for you to believe that it would be impossible to pay Medicare and Medicaid, which comes to only a combined $846 billion, which is only another 38% of our total income via taxes. Medicare and Medicaid would be fully funded, while the federal government could try to cut back on the Medicaid payments it owes to the states. But that remains to be seen.

This means that the three biggest woes, according to the Doomsayers, only totals about 71% of what we will take in this year. That still leaves us with 29% of our revenue to work with.

After providing entitlements and paying the interest on the debt THEY acquired, we still have more than $400 billion in unspent tax revenue, as well as another $2.4 trillion in assets to cover the remaining obligations our government has racked up(1).

One other thing on which all analysts agree: Holders of U.S. Treasury bonds, whether they are hedge fund managers in New York, retirees in Florida, or central bankers in China, will be first in line for the remaining cash. But there will still be PLENTY left over to take care of our necessities.

The fear being that America won't be able to pay its bills without a debt-ceiling increase is nothing but a lie being purposely spread by Doomsday Politicians seeking to forward their own agendas. Its all about power for some of the players, while other just want to keep on spending.

These crooked, self-serving politicians are trying to make Americans believe that not raising the debt ceiling will cause a significant downgrade of America's credit rating and spark a selloff of Treasury bills and US stocks in international markets. Those are also nothing but lies. Three major rating agencies(2) have already lowered their assessments of US debt and interest rates have not changed at all.

You will more clearly understand the problem when looking at why one these Egan-Jones Rating Agency (3), a Nationally Recognized Statistical Rating Organization with the Securities and Exchange Commission, changed its rating of U.S. government debt on July 16 from AAA to AA-plus. Egan-Jones released a statement explaining exactly why it made this decision:

"The major factor driving credit quality is the relatively high level of debt and the difficulty in significantly cutting spending. We are taking a negative action not based on the delay in raising the debt ceiling but rather our concern about the high level of debt to GDP."

In other words, investors are far more concerned about Washington's out-of-control spending problem than they are about the Treasury being able to issue more debt!

Weiss, another one of the rating agencies, went even further, lowering its rating from an already bleak C to a C-minus. Weiss explained:

"Our downgrade today is not contingent on the outcome of the debt-ceiling debate in Washington. It is driven exclusively by the numbers, which indicate that, in addition to a decline in the long-standing weaknesses we noted three months ago, the U.S. has already lost the golden halo that helped guarantee liquidity and acceptance of its government securities in global markets." In April, Weiss listed among those weaknesses the fact that, "[The United States] ranks 44th in terms of its debt burden, primarily because of its large deficits."

Nothing explains it all better that BusinessWeek's, Don't Play Chicken With the Debt Ceiling, by Rajat Gupta, from April 18, 2011. Destroying America's full faith and credit is no small matter to Bloomberg Businessweek. This Week's Cover Story imagenes what would happen if Congress fails to raise the debt ceiling and the US begins defaulting.



Selling assets and prioritizing payments are merely temporary measures that the Treasury can take to stop Doomsday; Our government must cut unnecessary spending, period.Washington spends billions of dollars on things it has no business buying or doing. If these spend happy socialites called politicians don't put on the breaks, this country will be in an far worse shape in the near future. Raising the debt ceiling is much like a drug addict getting one more fix. Washington needs to admit that it has a problem. No amount of fear mongering  can change that.

The bigger problem is our economy as a whole. The job market, the housing market, the ever dwindling manufacturing and the ever increasing dependency of foreign made products. The debt ceiling is a temporary crisis, while the declining economy could be the beginning of the end of America.

What do you think should be cut if the government is forced to set priorities? Let the ever more Conspiracy Watch readers know in the comments below.

Written By: Tom Retterbush

References

1. Calculations according to Veronique de Rugy and Jason Fichtner of the George Mason University Mercatus Center
2. The three rating agencies are Egan Jones Ratings Co., Weiss Ratings, and Dagong Global Credit Rating
3. The Cato Institute's Mark Calabria wrote about Egan Jones Ratings Co.: "It would be easy to dismiss these agencies as irrelevant and attempting to simply grab attention, but at least one of these agencies, Egan-Jones, has a track record of correctly predicting problems at such companies as Enron, WorldCom, Global Crossing, Bear Stearns and Lehman Brothers that the major rating agencies missed until it was too late."

Resources

2011 U.S. debt ceiling crisis (wikipedia.org)
Boehner discovers the obvious (baltimoresun.com)
McCaskill implores GOP on debt deal (stltoday.com)
A Beginners Guide to the Debt Ceiling (biggovernment.com)

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