Whalen gets it right, while others cry in their miserable pool of panicked hyperbole.
As someone who has been waiting 20 years for this debate to gain attention (see: Land of the Free And Home of the Broke: The United States Of Insolvency), I applaud his measured analysis as he echoes what we've been saying all along. The partisan fighting is a good thing. The issue has been simmering on the back burner for far too long, kept from the public while the debt continues to grow unchecked. The deal reached last night cuts nothing, outside of the growth rate of growth in federal spending. And if it passes this week, the grand opportunity will be lost for another 18 months, while the national debt increases by another $2.4 trillion.
43 cents of every dollar will remain borrowed, and your children will be left with an even bigger bill. Do not forget that our total national debt was approximately $2 trillion in the year 2000, after 234 years of deficits, save Andrew Jackson's courage to wipe it away, and now we add $2 trillion every 16 months.
$2 trillion every 16 months. With no end in sight. Last night's deal does nothing.
Take a look at Chris' latest blog post for Reuters, excerpted below, for a reasoned response to the misinformed, exaggerated wrangling of the mainstream financial press.
Why The U.S. Debt Crisis Is A Good Thing
For too long Americans have been on auto pilot, relying upon elected representatives and various flavors of hired agents in Washington and on Wall Street to manage our money and our nation. It’s time to start paying attention again.
Second and more important, the debate over federal spending and the tradeoff between higher taxes and greater fiscal discipline begins a larger discussion about the nature of the American political system. After 80 years of borrow, spend and inflate to finance the Cold War, Housing Bubbles and the rest of the world’s growth needs, the US economy has reached an endpoint. The experiment in corporate statism begun by FDR in the 1930s and extended through and after WWII has brought us to the brink of insolvency.
Of course Nobel Prize winning economist Paul Krugman rightly notes that a reduction in federal spending will result in pain for many Americans. But what he fails to tell these Americans, especially low income working people he pretends to love, is that the cost of the borrow and spend policies advocated by second generation New Dealers is persistent inflation, a diminution of purchasing power that is just as surely killing the hopes and dreams of all Americans.
I have long argued that a low growth, low inflation environment is better for the working people that the manic, boom and bust cycles caused by big federal deficits and following accommodative Fed policies to make this all seem to work in a nominal sense. Americans need to understand that we face not a mid-cycle slowdown, to paraphrase the economist Richard Alford, but a post-stimulus adjustment to economic reality.
New clip from Whalen...
Video - Debt Ceiling Row Proves Democracy Works - July 28, 2011
Recent stories from Chris Whalen:
Chris Whalen & Josh Rosner With Kathleen Hays On Banks, Bailouts, Europe, Dodd-Frank And The Debt Ceiling