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USA headed toward Default Analysis

Posted on Jul 14, 2011 by Paul White

Anyone who has been watching the news lately, knows that we are currently approaching an Aug 2 deadline to increase our debt limit.  This article is my opportunity to share my analysis of the mess we are in.

Obama and the GOP have been in negotiations to cut $4 Trillion from the budget over the next decade.  This money has to come from either spending cuts or tax increases.  So far most of it is coming from spending cuts.  The GOP insists that it will not accept any tax increases.  Everyone has taken a hard stance of what they are willing to not do, and this will ultimately be the cause for things getting really messy in August.

The GOP seem to think that Obama is bluffing.  He wouldn't let our country go into default.  They are wrong, dead wrong.  If you are a republican reading this, here is the situation you are in.  Obama is a gifted speaker.  No republican comes even close. When he decides to talk to the american people directly through a speech or a question and answer session, all news channels ( CNN, CNBC, FOX, MSNBC ) will tune in.  During this time Obama will make his case for the reasons talks are not going well.  He will point out the fact that Republicans are not willing to increase taxes on special interests, or corporations.  Republicans are not protecting Americans, they are protecting the few that donate to their campaigns. He will make republicans look responsible for the default that is bound to happen.

They are convinced that if they raise taxes on large corporations, or what they call job creators, that they will loose the respect of their base and not be reelected.  But if we go into default the stock market will crash, interest rates will skyrocket, and this will cost Americans more money than any tax increases would.  The GOP doesn't want to make real cuts.  They want to look like they would, and hope the American people won't be paying attention.  The GOP claim that if we just cut all the entitlement spending this could easily cover the 4 Trillion we need.  But what the GOP doesn't understand is that so many people are getting by on Entitlements, that cutting them off would likely set off riots, and a crime spree.  This recession has been masked by millions of people who now live on food stamps and umemployment. Without these entitlements these people would likely resort to to crime or violence to get simple things like food.  Even though I am all for cutting entitlements, its not something you can just pull the plug on over night.  The shock to our economy would be terrible.

No matter what the reasons are for our current Debt crisis, the fact is fixing the problem is going to hurt.  The GOP now wants to do a small increase in the ceiling with several votes over the next year.  This is just for political reasons.  They want to control the issues during the 2012 campaign, and they for some reason think this issue will be a good one for the GOP.  The GOP need to wake up.  None of your canidates stand a chance against Obama.  The only guy who could get the support based on issues is Ron Paul, but Ron Paul wouldn't bend his policies towards the corruption platform that the GOP has come to represent. 

I remember 10 years ago when Fox News was fair and balanced.  Today its all drama designed to scare seniors, so they will stay turned during the drug commercials.  Fox is nothing more than a propaganda machine for the hard right, nothing on that channel is even remotely moderate.  I am still surprised to this day that RUSH doesn't have his own show on Fox.  Of course I guess on Fox you have to look good on camera, and that might be a problem for RUSH.

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