Not even a debt increase cheered by Wall Street can override the debt-induced economic stagnation.
Despite being dispirited by the one-sided nature of the debt ceiling deal, most of us were looking forward to reaping the rewards from its only ancillary benefit; the impending stock market rally. Much to our chagrin, the Dow dropped precipitously, losing over 600 points since the opening bell on Monday. After the initial euphoria from the debt ceiling hangover began to subside, people have been forced to confront an inconvenient reality. The problem with the economy is not the debt ceiling; it is the debt – and all that it represents; overbearing and job-killing government.
Late Sunday night, Republican leaders forged a bipartisan deal with the president to raise the debt ceiling another $2.4 trillion without any preconditions for the second tranche. Despite pretentious claims that we were entering a new era of austerity, the debt deal has charted us on a trajectory to incur $7 trillion more in debt, even considering the unrealistic baseline projections of economic growth and revenue.
Well, the Treasury wasted no time utilizing its new credit card and devouring the spoils like the starved beast that it has been for the past few months. On Tuesday, Treasury Secretary Tim Geithner issued $239 billion in new debt, almost 60% of the entire $400 billion increase in borrowing authority that Congress granted for the first round of the debt limit hike. To put that in perspective with the “austerity side of the debt deal,” it will take 4.5 years to achieve a commensurate degree of savings from the discretionary caps imposed in the bill. I guess that is one way of measuring dollar-for-dollar cuts.
Our total cumulative debt (including the intragovernmental share) now stands at $14.58 trillion, approaching 100% of out GDP for the first time. We have joined the failed socialist experiments of Europe in this ominous distinction.
Nevertheless, at the very least, we should have enjoyed the inevitable market rally that was so eagerly anticipated by the bipartisan cheerleaders on Wall Street. After all, our borrowing authority is inviolable, as we are slated to borrow trillions more over the next few years. Hey, a few billion dollars of debt a day keeps the default away – and will forestall the greatest market crash ever. Won’t it?
Despite being dispirited by the one-sided nature of the debt ceiling deal, most of us were looking forward to reaping the rewards from its only ancillary benefit; the impending stock market rally. Much to our chagrin, the Dow dropped precipitously, losing over 600 points since the opening bell on Monday. After the initial euphoria from the debt ceiling hangover began to subside, people have been forced to confront an inconvenient reality. The problem with the economy is not the debt ceiling; it is the debt – and all that it represents; overbearing and job-killing government.
Late Sunday night, Republican leaders forged a bipartisan deal with the president to raise the debt ceiling another $2.4 trillion without any preconditions for the second tranche. Despite pretentious claims that we were entering a new era of austerity, the debt deal has charted us on a trajectory to incur $7 trillion more in debt, even considering the unrealistic baseline projections of economic growth and revenue.
Well, the Treasury wasted no time utilizing its new credit card and devouring the spoils like the starved beast that it has been for the past few months. On Tuesday, Treasury Secretary Tim Geithner issued $239 billion in new debt, almost 60% of the entire $400 billion increase in borrowing authority that Congress granted for the first round of the debt limit hike. To put that in perspective with the “austerity side of the debt deal,” it will take 4.5 years to achieve a commensurate degree of savings from the discretionary caps imposed in the bill. I guess that is one way of measuring dollar-for-dollar cuts.
Our total cumulative debt (including the intragovernmental share) now stands at $14.58 trillion, approaching 100% of out GDP for the first time. We have joined the failed socialist experiments of Europe in this ominous distinction.
Nevertheless, at the very least, we should have enjoyed the inevitable market rally that was so eagerly anticipated by the bipartisan cheerleaders on Wall Street. After all, our borrowing authority is inviolable, as we are slated to borrow trillions more over the next few years. Hey, a few billion dollars of debt a day keeps the default away – and will forestall the greatest market crash ever. Won’t it?
