Usually I think of these debt level squabbles as political theater. However, I’m beginning to think that there is a possibility this time it might be for real. Odds are that some kind of deal will be cobbled together at the last minute, but there is a chance that nobody will blink and both parties will drive the nation over the cliff.
As a mental exercise, let’s assume that the no deal is struck and the debt level is not raised. Theoretically, that means someone isn’t going to get their money. I’m curious to see who gets paid and who gets the shaft.
We can assume that all the politicians will get theirs. Long history has shown us that they live under different rules than the rest of us. After that, it gets interesting. Will the military get paid? Oh I’ve no doubt the military contracts to the big defense companies will be honored. If anyone doesn’t get paid, it’ll be the grunts in uniform.
How about Social Security payments? The president threatened that those might not go out. That’s a huge political mistake. Lots of people depend on those checks, small as they are, to survive. It would be a huge breach in the social contract. If I had a job that took out Social Security taxes, I’d really wonder why they were still being taken out. Most people still hope to get at least some of those taxes back. I’d be pretty ticked off and would do everything I could to not pay them.
Will the big International creditors get theirs? How will the investor class fair? Foreign nations? If these interests get paid and grandma’s pension check is canceled, it’ll be a sure sign the government isn’t for the people. Oh I know it isn’t, but after that, everyone will know.
Who can the government afford to screw? It’s own people or the financial markets? Either way leads to trouble.
Iceland got away with screwing the big banks, but it’s economy is a fly speck compared to the US economy. The Banksters can write off an Iceland. They can’t do the same to the US.
The stakes are high, so there is plenty of incentive to paper over the current mess. However, there are enough politicians who believe their own rhetoric that it’s possible no one bends enough to settle things.
In the long run, odds are the economy is going to crash anyway, but I’ve been kinda expecting this since the late 70s. I’m just as happy we didn’t have blood in the streets back then, and don’t want to see it now. If they try to implement “austerity measures” like they did in Greece, it could get very ugly very quickly.
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