Debt Limit Theater

Will a failure to raise the debt limit hurt the economy? It depends, as Bill Clinton might say, what the meaning of economy is. As I pointed out before, and Dave Rosenberg also points out, the government’s deficit spending is going into corporate profits, not into the wages and salaries that benefit the vast majority of people. So if the government must drastically reduce spending, it will face a choice between impacting the voters by cutting entitlements, or hurting corporate profits by cutting the other half of government spending, wars and the military. Needless to say, the focus is on entitlements. President Obama has already threatened to withhold Social Security payments, and of course reducing Medicare and Medicaid. No sacrifice is too great in time of war, we will doubtless be told.

They’re going to have to decide what to cut back. So they’re going to cut back the bone and they’re going to keep the fat, basically. They’re going to say–they’re going to try to panic the population into acquiescing in a Democratic Party sellout by cutting back payments to the people–Social Security, Medicare–while making sure that they pay the Pentagon, they pay the foreign aid, they pay Wall Street.

Of course, all of this is purely academic because, when the posturing is over, the debt limit will be raised without any reduction in spending. This should be an indication to the American people of the impossibility of change while the “two-party system” (really a one-party system with entertainment) continues in operation. I presume that it will be necessary to continue the absurdity until the economy collapses for people to finally understand that their system of government has been hijacked.

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