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July 15, 2011

Clearing Up Some Debt-ceiling Misconceptions

Topics: Political News and commentaries

Over at NRO, Deroy Murdoch says it's time to clear up some debt-ceiling misconceptions,
beginning with reminding us of the obvious, that responsible consumers awash in debt do not beg credit-card companies to hike their borrowing limits. Instead, they freeze their credit thresholds and pay their debts, ideally until their finances are back in the black - the exact opposite of what the Obama administration is proposing:

Obama's insistence on raising the debt limit is like saying, "You are right, MasterCard. I am tapped. So, I will forgo theater tickets and skip my annual ski trip. Now, please raise my limit by $5,000." MasterCard's customer-service representative would explode into laughter.

Congress should not hike the debt limit, period. The staggering sum of $14.3 trillion should remain the Everest of U.S. financial irresponsibility from which Uncle Sam must descend. This will be arduous but far healthier than climbing into ever-more-vertiginous debt and triggering an all-consuming avalanche of unpayable bills.

As for the notion that leaving the debt limit intact will trigger default, Murdoch notes that this is another monstrous lie designed to bamboozle the American public and cow Republicans into retreat:

... As with a credit card, default means neglecting one's bills rather than respecting a debt cap. If Visa refuses to augment a customer's credit line, default occurs only if he stops making minimum payments. Indeed, as his balance drops, his credit rating improves.

America must do this.

For Fiscal Year 2011, Treasury expects $2.23 trillion in revenues, from which it must pay bond holders $213 billion in interest. As Sen. Pat Toomey (R., Pa.) explains, if Treasury can manage this, America will not default.

As for the Democrats "polluting the proceedings" with their core myth that the wealthy do not pay their fair share of taxes:
... This narrative capsizes reality, and leading Democrats know it. Yet they bellow otherwise:

... According to an April 2009 Congressional Budget Office report, in 2006 (the most recent data available) the top 1 percent of taxpayers made at least $332,300 annually and paid 28.3 percent of all federal taxes. The top 10 percent (earning $98,100 or more) paid 55.4 percent of all federal taxes. Meanwhile, the bottom 60 percent of taxpayers earned up to $47,399. They paid 14 percent of all federal taxes.

Regarding effective federal tax rates, CBO reported April 4 that in 2007, all taxpayers averaged a 20.4 percent tax rate. However, the top 1 percent effectively paid 29.5 percent, and the top 10 percent paid 26.7 percent. The bottom 20 percent of taxpayers paid an effective rate of just 4 percent.

So, the notion that the evil rich are paying less than their "fair share" is yet another lie that infects this debate. If it is insufficient that the top 10 percent pay 70 cents of each federal tax dollar, what would suffice -- 80 cents? 95? 100?

Obama's contribution to this deceit is an obsession with company aircraft.

Read the whole thing. Along with clearing up more debt-ceiling misconceptions, Murdoch points out how Washington can generate revenues for immediate debt reduction without increasing taxes.

And as Murdoch goes on to note, what a great world it would be if Democrats abandoned their galactic deception and hateful class-warfare .. and if Republicans were less timid about proposing deep budget cuts, agency closures, and revenues that did not impose tax hikes on this wheezing economy. Imagine what an attractive debt-reduction deal America might enjoy if Democrats were honest and Republicans were courageous.

Posted by Richard at July 15, 2011 11:00 AM

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