The White House is now reporting that the debt day is approaching faster than expected. August 2nd was the cut-off date for negotiating a deal, but now Congress must agree to a deficit-reduction deal by July 22 to avoid hitting the limit. Meanwhile, Republicans and Democrats are deadlocked in opposing positions. Included in one…
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Discussions of a Treasury default all share one common feature—no one is certain as to what a default would actually entail. A recent article in The Economist highlights a study by Terry Zivney (Ball State University) and Richard Marcus (University of Wisconsin-Milwaukee) that looked at the last instance of U.S. default in 1979. The…
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Bernanke urges for an increase in the debt ceiling, demonstrating the wisdom of James Buchanan and Richard Wagner. In Democracy in Deficit, Chapter 8, the authors set out to model Keynesian-oriented fiscal policy with the “the plausible hypothesis that monetary authorities are, like elected politicians, subjected to both direct and indirect political pressures, and…
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Last year, Americans believed Federal government debt to be just as dangerous as terrorism. According to the a June 2010 Gallup poll, 4 in 10 Americans ranked both Terrorism and Federal Debt as an “extremely serious” threat to the future well-being of the United States. One year later, Osama bin Laden is dead. The…
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The Treasury Department reiterated that Aug. 2 remains the projected day the U.S. would start defaulting on its obligations. The U.S. reached its $14.3-trillion debt ceiling on May 16, but Treasury officials have been doing some complex financial juggling to push off the date at which the nation would start defaulting on its obligations….
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Charles Rowley summarizes two options facing bond holders as sketched out by Stanley Druckenmiller, the legendary investor and onetime fund manager for George Soros. “First, suppose that one owns a 10-year Treasury. In return, one receives an income stream over that period. As a result of default that income stream will be delayed for…
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In the following video, Independent Institute Research Fellow Jeffery Miron discusses why federal entitlement spending (Medicare, Medicaid, and Social Security) is growing to unprecedented levels and must be cut and cut and cut some more if the U.S.’s fiscal spending and debt crisis is to be resolved. HT: Mike Munger
No, I am not referring to the Allied Leaders in WWI, college basketball, or the top accounting firms in the U.S. The BIG FOUR of the Budget are Medicare, Medicaid, Social Security and Defense. Together they make up around 65% of non-discretionary spending. Today, the New York Times and Wall Street Journal are running…
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Edward P. Lazear (former Chairman, President’s Council of Economic Advisors; Jack Steele Parker Professor of Human Resources Management and Economics, Stanford University; Morris Arnold Cox Senior Fellow, Hoover Institution) proposes significant spending cuts, no tax increases, and most importantly—adoption of rule-based constraints on future government spending. What do you think—is limiting growth in government…
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