Debt-fight doomsayers By CHARLES GASPARINO I've lost count of how many times President Obama and Treasury Secretary Tim Geithner have said over the last three days that America might default if the debt-ceiling impasse continues. For the good of the country, let's hope the markets have forgotten as well. It's hard to see how Obama, Geithner or White House Chief of Staff Bill Daley could have had the good of the country in mind as they made the rounds of the Sunday talk shows -- spreading dire predictions about default if the debt ceiling isn't raised in the fashion that they and their Democratic allies believe appropriate. For all their apocalyptic talk, they're still demanding a budget deal filled with jobs-killing taxes, even as unemployment remains north of 9 percent. OK, a default would be a disaster. A US failure to pay bond holders could tank the Dow and upend the bond markets, where companies borrow to finance everything from plant and equipment to employee salaries. Credit cards might not work because banks won't have access to borrowed money to lend to consumers. Forget about getting a loan to buy a house or a car. In other words, the economy could come to a halt. But there's no reason for default even if there's never a debt-ceiling hike. Even if Congress and the president remain deadlocked past the Aug. 2 deadline, when the feds are supposed to run out of money to pay all their bills, a default still leaves them with plenty of cash to pay the most important ones. Uncle Sam takes in $2 trillion in tax revenues yearly and spends around $200 billion on debt interest. Geithner can cover the bond payments just fine -- and hold off on sending out other checks. Of course, it wouldn't be pretty to stiff defense contractors and agribiz giants while a budget deal is hammered out, but it's way better than the financial calamity a default is likely to spark. Perhaps more important to Obama & Co., default would leave less room for government spending for the rest of our lives -- because the country would have to pay much higher interest rates on its debt when we come back to the markets. (We'd definitely have to; even under the most austere budgets talked about in Washington, the country will still have a deficit for the foreseeable future.) So why are Obama & Co. using the "D word" so obsessively? Here's two possibilities: One: They really mean it. Obama would rather stiff bondholders than cut the size of government. I find that hard to believe, even though he's devoted his years in office to expanding government so dramatically. Two: Obama's crew loves chaos. Remember: These guys rode to victory in 2008 largely because of the financial collapse -- and won with promises to lead a moderate economic course that put Americans back to work. We've gotten the stimulus, the car-company takeovers, ObamaCare, tons of regulation and vows to hike taxes on "millionaires" who make $250,000 -- and an economy that's nowhere close to taking off. But the political formula might work. This president knows how to play the blame game -- and how to look moderate while he's doing it. A situation in which the markets crater this week on fears of a default gives him a handy club. With support from his allies in the media, it might be one big enough to cow Republicans into caving to his demands for higher taxes in a debt deal. So far, the bond markets have remained relatively calm through the whole impasse. Most investors don't seriously fear a decline in the country's bond rating, no matter what the rating agencies say about the country's fiscal problems. Investors don't believe any president is nutty enough to actually walk away from obligations to global creditors. But that was before the events of this weekend. So let's hope they weren't watching TV. Read more: http://www.nypost.com/p/news/opinio...omsayers_AhCKQLmjQi8e3phgFwi46O#ixzz1T7QUyLdN
Even if Congress and the president remain deadlocked past the Aug. 2 deadline, --------------- The problem is: Obama's b-day party will be ruined.
The question is, will Obama's personal well being be affected either way? No. Therefore, assuming people act in self interest, he is only going to do what lobbyists tell him to do.