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Discussion: (9 comments)

  1. Fair’s fair, so one person, whose conclusion is “we are probably best off if there is no default”, is a “default caucus”?

  2. Calling it a “caucus” on the left is misleading and a case of false-equivalence. Pethokoukis is comparing two Economists to GOP members of Congress. Do Baker and Eichengreen meet the definition of “caucus” below?

    cau·cus (kôks)
    n. pl. cau·cus·es or cau·cus·ses
    1.
    a. A meeting of the local members of a political party especially to select delegates to a convention or register preferences for candidates running for office.
    b. A closed meeting of party members within a legislative body to decide on questions of policy or leadership.
    c. A group within a legislative or decision-making body seeking to represent a specific interest or influence a particular area of policy

  3. There is zero chance of default.

    Monthly, tax revenue works out to be about $250 billion of tax revenue per month and monthly net interest payments are about $20 billion. Yes, these payment and receipts are “lumpy,” so to let the coffers run completely dry is a potential problem.

    All entitlement spending is another $125 billion per month. That’s $145 billion of absolutely essential spending per month versus $250 billion monthly revenue. So all Medicare and Social Security checks can go out.

    All interest payments can be made—easily.

    See my blog entry: Fear Mongering By Democrats is Irresponsible:

    http://gulfcoastcommentary.blogspot.com/2013/10/fear-mongering-from-democrats.html

    1. You write “to let the coffers run completely dry is a potential problem.” But the reason it’s a potential problem is that it would lead to default. It follows that there is not “zero chance of default.”

      1. true, running the government past the debt ceiling to the tune of $50 billion using accounting tricks is a problem it’s true. You’re right, there would be some risk if no one did anything. But monies would be approved to cover interest payments to cover any lumpiness. The US will never, ever default. I don’t care how irresponsible members of Congress are in other areas. The Republicans ironically are the party of financial responsibility–why else would they make such a fuss as we pass $17 Trillion in debt? It’s not popular. It’s the Dems that are the party of fiscal and personal irresponsibility. My understanding is that there are no significant interest payments until Nov 1.

        1. Todd Mason

          You’re kidding, right? A Republican prez and Republican congress gave us Medicare Part D. The basic premise of supply side economics — cutting taxes now in expectation of higher revenues later — is called gambling where I grew up. Nothing the House Rs have done in the last two weeks could be called responsible in any analysis. Sayonara Teabaggers. Thanks for overreaching.

          1. supply side economics created 20 million jobs during Reagan’s tenure alone despite one of the steepest recessions in 1981 to 1982. Because of that tax revenues rose from $600 billion to $1 Trillion in 1990 or 70% in constant dollars. Those supply side job gains continued under Clinton as well. Bush’s performance was not good, you’re right. Obama by not negotiating is complete bullshit—a complete abdication of his job. It’s about what I’d expect for an leftist amateur who continues to harm the country with EVERYTHING he does.

          2. Todd Mason

            Not wild about using Wikipedia, but it says here Ronnie created 5 million jobs in his first term. http://en.wikipedia.org/wiki/Jobs_created_during_U.S._presidential_terms

            Bill did 11 million jobs in his. As I recall those years, Bill’s tax hikes on top of George HW’s was considered a repudiation of supply side.

            And what’s O supposed to negotiate? How far to bend backward to appease the lunatic fringe?

  4. Benjamin Cole

    The rest of you can discuss this. I have decided on complere denial. I do not believe there is a Congressman named “Yoho” who says defaulting on USA debt will bring stability to global financial markets.
    The Banana States of America, here we come…

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