Default & Debt Are Not The Only Two Choices

Another fine bit of work from Dr. Emily Skarbek. We need to ask, Just How Bad Would A 25% Budget Cut Be?

Over the last two weeks we’ve been told that if we don’t raise the debt ceiling there is no other choice but default, wailing, and gnashing of teeth. And to make it worse everyone might get restless leg syndrome, gingivitis, and one of several flavors of Hepatitis. Turns out that’s not quite the case. This is a fine column.

[N.B. Dr. Skarbek is a recent GMU grad, and is affiliated with both the Independent Institute and MyGovCost. That’s mad econ street-cred.  ;-)]

Debt or default: A false choice: “With the White House and the House of Representatives still at loggerheads over how to resolve the debt crisis, administration officials are turning up the heat, claiming that Washington has only two choices: increase the government’s borrowing capacity beyond the current $14.3 trillion limit or face a catastrophic U.S. Treasury default. If the latter happens, they warn, the government won’t be able to pay its debts and will have to stop cutting checks. But this is a false choice. There’s a third option: Washington can cut spending.”

Related links:
An Easy Solution to the Government’s Debt-Ceiling Impasse
Emily Skarbek on Rejection of Goolsbee Claim‬‏ – YouTube
Dr. Rizzo asks, “Where Did it All Go?

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