Date: October 2, 2013

Political Posturing Time

The government may be closed but the markets are open for business and apparently not too concerned about the shutdown. This week stocks are down less than 1% and trade as if a solution is not too far off. That’s not how I see it, but what do I know?!?! My thoughts were and remain that if we saw a shutdown for more than a day, it would be a lengthy one that would bleed into the debt ceiling deadline on or about October 17. That’s not a good thing because those geniuses in DC might just be stupid enough to play chicken with the debt ceiling.

Let’s face it. We all know, dems and repubs, that the debt ceiling is going to be raised. Period. If the market was collapsing like we saw in the fall of 2008 with the TARP bill, I guarantee you the geniuses would be working 24/7 on a compromise. But the markets are not the least bit concerned, yet. Let’s hope that DC gets their act together on a budget solution well before a debt ceiling crisis.

It seemed like yesterday that we discussed raising the debt limit. Wait, it was yesterday and last week, last month, last quarter and last year. In fact, it’s been a never ending saga for decades. The party in power sells fear and disaster while their opponents balk and talk about fiscal responsibility, etc. Thanks to the internet, we are able to easily find the hypocrits.

President Obama says he will not negotiate with the debt ceiling. It must be increased no matter what. I agree 100% with the president on this topic, but in 2006, then Senator Obama voted against raising the debt saying,

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

Senate Leader Harry Reid, a huge proponent of raising the debt limit right now, was quoted in 2006 as saying,

“If my Republican friends believe that increasing our debt by almost $800  billion today and more than $3 trillion over the last five years is the right  thing to do, they should be upfront about it. They should explain why they think  more debt is good for the economy.

How can the Republican majority in this Congress  explain to their constituents that trillions of dollars in new debt is good for  our economy? How can they explain that they think it’s fair to force our  children, our grandchildren, our great grandchildren to finance this debt  through higher taxes. That’s what it will have to be. Why is it right to  increase our nation’s dependence on foreign creditors?

They should explain this. Maybe they can convince  the public they’re right. I doubt it. Because most Americans know that  increasing debt is the last thing we should be doing. After all, I repeat, the  Baby Boomers are about to retire. Under the  circumstances, any credible economist would tell you we should be reducing debt,  not increasing it. Democrats won’t be making argument to supper this  legalization, which will weaken our country. Weaken our county.”

I know I am picking on the democratic leadership now, but the GOP did the same thing in 2006, supporting raising the debt limit then but not now. Chuck Grassley was a big flip flopper and I know there are many others. The bottom line is that the party in power cries wolf and the opposition tries to exact a pound of flesh although it seems to have gotten worse over the years.


Paul Schatz, President, Heritage Capital