Don’t blame the Tea Party
If you want to point fingers, start with statism
Without that promised growth, the United States will not be able to repay its debts. That’s the reason markets tumbled in recent weeks. Despite attempts by assorted pundits to pin the market collapse on the Tea Party and a haywire ratings downgrade by Standard & Poor’s, the stock markets around the world more likely reflect the fact that there’s a global government debt crisis.
But the data compiled by the McKinsey Global Institute show that global government borrowing by 2010 had already delivered plenty of trillions — $25-trillion since 2000, and $11-trillion over the last three years alone. During the 1990s boom decade government borrowing held steady at about 43% of global GDP. Last year borrowing soared to almost 70% of GDP, or $41-trillion, most of it racked up since 2007.Read more at opinion.financialpost.com
Ben Bernanke vs. the Tea Party
A big early test of the power dynamic within the new Republican Party will come this spring (or possibly in early June) when the U.S. runs out of borrowing authority and Congress will have to vote on whether to raise the federal debt limit. Some Tea Party-backed conservatives in Congress, many of whom ran have vowed to end Washington’s borrowing and reel in the debt, insist they will oppose raising the debt limit—even though economists say failure to do so could create chaos in the financial markets, and even top GOP leaders are warning that Congress has little other choice.
Read more at swampland.blogs.time.com
I’m not aware of any Republicans who actually want to see the U.S. default on its debt. But it is common to hear conservatives—including the likely 2012 GOP presidential candidates like Tim Pawlenty—any debt limit increase should be leveraged into simultaneous major spending cuts. That argument got a big kick in the shins yesterday, however, in the form of public remarks by Federal Reserve Chairman Ben Bernanke: