Debt Ceiling Chicken

The debt ceiling debate is degenerating into a game of chicken. Each side is waiting for the other to cave. Obama says we have to set a long-term deficit/debt reduction in process, and wants to shoot for $4.5 Trillions in cuts over ten years; the Republicans, until recently, were saying they'd work for a $2 Trillion cut, because, frankly, they're scared of taxes. Scared that if they vote for any increase in taxes for the wealthy (they call them "job creators," which they definitely are not, especially now in this jobless "recovery"), they'll suddenly lose all the huge corporate campaign contributions they're counting on to gain the majority and the Presidency in 2012.

Perhaps the Republican leaders do get it, that a default would be bad, very bad, but both Boehner and McConnell have as much as said, more than once, that their real mandate is to insure that Obama fails, and is not re-elected. If they do force a default, however, it's not clear that Obama wouldn't be able to campaign against them for causing it, and for opening the way for other unpleasant things: like the dollar no longer being the reserve currency, our huge debt becoming hugely more expensive and our freedom to import whatever we want whenever we want it going away.

I think Obama knows this, so he's playing chicken, too. No short-term fixes, he asserts: this is America; we don't fix our books for 3 months at a time.

Some tea party types do actually argue that a default would be a good thing, and I could, too, from one perspective. They argue, and I wouldn't agree, that we'll have to cut back on all those senseless 'consumption' programs like Medicare and Social Security (say insurance), and that as far as Medicaid is concerned, the recipients are mostly no-goods, anyway.

I argue that a default would mean we'd no longer be able to afford our costly military and its world empire. We actually can't afford it anyway. And, ultimately, we'd be much better off without it: all those things we "can't afford," like high quality education and Medicare for all, we'd easily be able to pay for--if we weren't spending almost three-quarters of a trillion yearly on "Defense" and its relatives, like Intelligence, Energy and "Homeland" Security.

And we'd be freer, too. No longer would our police forces try to emulate (and get funds from) the military, for things like tanks and armored cars. No longer would the military be so sacrosanct. And no longer would the rest of us be treated as if we were potential terror suspects.

However, a default would be painful for everyone but bond and currency traders; for them it could create fortunes. A default would mean: the beginning of the end of American Empire. Bankruptcy caused the "Fall of Rome."