The cost of the 2008 meltdown approached 13 trillion dollars – or almost the entire amount of the deficit Washington is so worried about now. So in the name of a 3-4 trillion “Grand Bargain” or the extra cost of Obamacare, they are pushing us toward a 13 trillion dollar calamity. Most authoritative sources agree that a failure to raise the debt limit will result in a recession of equal or greater magnitude than the 2008 meltdown. Therefore the 13 trillion is probably a low estimate. Then there is the adverse impact of selling Treasuries in the future. These constant threats to the credit of the USA will eventually drive up our borrowing costs and drive many investors away as the world ponders when we will actually default for real after some many close saves. We now pay 220 billion in interest. That will rise if Treasuries are deemed to be a risky investment due to our government’s lack of responsibility.
A recent article about the IMF in today’s LA Times stated, “”Failure to lift the debt ceiling would be a major event,” said Oliver Blanchard, the IMF’s economic research director, echoing concerns voiced by many experts around the world. It would almost certainly derail the American recovery and spill over to the rest of the world, he said at a briefing Tuesday.”
We fought two wars and are still fighting one of them in Afghanistan over 9/11. A NY Times article from a few years ago stated that the economic loss of 9/11 to the US economy was 3.3 Trillion dollars and this does not include the 3 Trillion we have spent prosecuting the wars.
So, to put this all in perspective, Congress and the White House are threatening to bring on an event that will cost this economy 4 times the damage of 9/11. If we default, our self-inflicted wounds will be four times more costly than those from Al Qaeda. The so-called grand bargain would save 4 trillion dollars spread over ten years. The 13 trillion in damage from a default will wipe out 30 years of “Grand Bargains”. There is no exact figure for what Obamacare will cost the economy since we must pre-judge a program that has yet to be fully implemented. However, some of the speculative costs mentioned would make the cost of a potential meltdown due to default 20 times greater than the projected cost of Obamacare.
Bottom line – the feckless, warring parities on both sides are threatening to bring on a disaster that will cost our economy 4-20 times the issues they are arguing about, could more than double our borrowing costs and trigger a broader global downturn. This is insanity. What is more insane is to argue among ourselves in the face of the economic terrorism of our own government. We were united after 9/11 and we need to be united as a people now. We pay Washington to get positive things done. It’s up to all of us to unite and pressure our Congressman and the President to do their damned jobs and govern for the common good.
Fred Thimmel, is the President of Bryant Products, and CEMA’s (Conveyor Equipment Manufacturers Association) Government Affair’s Committee Chair.
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