Pay China First?
Ξ January 31st, 2011 | → Comments Off | ∇ Politics |
The freshman Senator from Pennsylvania, Pat Toomey, recently suggested that the interest on US debt be paid before all other spending. This strikes me as a decent idea – it strengthens US credit by giving priority to those that have and will lend the US money. It also a just idea – paying debts before new spending.
But the political opposition seem to be opposing it because, lacking an increase in the debt ceiling, it will require spending cuts. Playing games with the debt ceiling is a bi-partisan activity. Republicans have done it to tweak Democrats in office, and vice versa. However one gets whiplash watching Obama go from arguing and voting against raising the debt ceiling just a couple years ago to his surrogates question the sanity when Republicans, heavily influenced by the Tea Party (who’s raison d’etre is the economy) argue for austerity.
But Kent Konrad and the liberal blogosphere are arguing that Toomey’s idea is “paying China first”, because those financing the debt (of whom, China is famously one of the largest) get paid first . The cynicism of this argument is just staggering. The implication is that bond holders shouldn’t get paid – otherwise who cares whether their money is first or last. It’s a blind appeal to the worst aspects of nationalism – something that drove places like DailyKos and TPM nuts when they perceived it coming from Bush. Now they echo the “Paying China First” line, at the expense of the credit standing of the US. We want, we need China to continue to buy US bonds, so long as we continue to run deficits. Why would anyone want to buy bonds when those that control the Senate and the White House opening imply that they should default on that debt?
Both sides are playing politics on the issue, but the Republicans are playing politics towards the goal of austerity, which given the state of the economy and national debt, makes a good amount of sense. If Democrats aren’t playing politics out of pure self interest, I honestly don’t know what they’re working towards.
