This week, the U.S. House of Representatives defeated a bill to raise the U.S. debt ceiling. Failure to raise the debt ceiling will mean that the United States will default on its debt. That would be devastating for not only the U.S. economy, but the world's economy. Even the potential that the United States might default on its debt can injure the United States financially in major ways. The United States never defaults on its debt. That's why United States Treasury Bills are the safest investment in the world.
While there were both Republicans and Democrats voting against the bill, the Republicans went on record saying that the defeat of the bill was intended to send a message to President Obama that the Republicans in the House will not agree to raise the debt ceiling unless President Obama and the Democrats agree to significant cuts in the current federal budget.
Unfortunately, that also sends the same message to every investor in the world - all those who purchase the debt of the United States government. If nothing else, that raises the cost of borrowing money for the United States, which runs up the deficit even higher, which isn't good. It is supposedly the thing the Republicans are most concerned about, but obviously they aren't.
In any event, the Republicans are playing chicken with the world economy. They know better.
The U.S. Congress should pass a clean bill raising the federal debt ceiling, so all the world will know that we won't, under any circumstances, default on our debt. Then they can argue about how much to cut the budget.
Even if the Republicans and Democrats can't agree on how much to cut the federal budget, or whether to cut it at all, the world needs to know, beyond any doubt, that we won't default on our debt. If you buy a U.S. government security, you're going to get paid. No matter what.
The phrase "as sound as a dollar" didn't become trite for no reason and it is crucial that it remain true.
Shame on the U.S. House of Representatives for risking the well-being of everyone in the world! Because that's what they're doing. Shame on them!
