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Understanding Debt Ceiling Attitudes

While President Obama claims that 80% of Americans want to see their taxes increased to address the Federal deficit, Congress continues to debate raising the debt ceiling and we close in on the highly publicized August 2nd deadline to avoid a government default, there are several points that need to be made to keep claims of public support in context.

First, significant numbers of Americans aren’t convinced this whole issue is really a big deal and they don’t trust the people telling them it will be a disaster. Only 12% have confidence in what Congress says, 19% in big business, 23% in banks, and 27% and 28% in what they hear from TV and print media outlets.

Second, to a lot of people who share the sentiments of the Tea Party this sounds a lot like the same groups of people who gave us Wall Street banks, car companies, big businesses, and state governments looting the treasury now threatening us with dire consequences if we don’t let them do it again.

It is a hard sell to convince these individuals that the Federal Government should be allowed to borrow yet more money when they believe so much money has already been wasted.

This has led to Americans being split on the issue. Despite the drumbeat of messaging from the Administration, Wall Street, and the press, 46% of Americans say the debt ceiling should be raised and 49% say it should not.

Lastly, there is a lot of evidence out there showing that August 2nd, much like the deadlines floated previously, is artificial. The more Republicans in Congress become convinced this is true, the more they are sure that it’s just a way for the President to force an increase without addressing spending or the deficit.

Furthermore, American voters tend to agree with this point of view. A recent CBS news poll showed that a majority of Americans (51%) say the US probably wouldn’t default on its debt if the ceiling weren’t raised.

There are also a small, but important, number of voters and legislators who believe that the end-game of not raising the debt ceiling is a partial government shut-down rather than a default.

If that’s true, it gives Libertarian and Tea Party-leaning voters and officials what they’ve wanted all along and they’re not eager to compromise if all that happens is an immediate and massive spending cut.

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COMMENTS

  • YnotNOW

    nt

  • Repair_Man_Jack

    hype was overstated and a method by which greater state control could be enforced on our everyday existence. (The paperwork to get a 30-yr Fixed Rate Mortgage w/ a check in hand for a 20% DP is way greater than it was before).

    It begins to remind me of the Global Warming liars. These people are always crying “Wolf” if we don’t let them have more power. I fail some days to see the biological difference between some of these people and the wolves they attempt to scare us with.

    • acat

      is where they lost me.

      The Standard Oil Trust wasn’t “too big to fail”… and it dwarfed, for its’ day, any of the outfits that TARP ended up helping – including GM.

      The Statists of both parties have adopted FUD as their strategery, and will be using crises, real or imagined, to increase power in D.C.

      I don’t see a way for this to end well.

      Mew

      • Repair_Man_Jack

        The 10.6% arse-reaming we would get from a debt-ceiling forced crash is mild in comparison. We are turning into the very thing we defeated during the Cold War.

        • acat

          “Alas, {we} chose … poorly”.

          (can’t look it up just now but .. the knight from the third “Indiana Jones” movie)

          Mew

        • JSobieski

          After all, QE2 is just another way of saying “printing press”. Is it possible that the people buying T-bills are just hoping we make good, or is the alternative so unthinkable that the entire planet is sticking their heads in the sand?

          • acat

            Ron Paul’s favourite boogeyman the Fed?

            Bernanke had promised to stop doing that at some point, IIRC.

            Mew

          • JSobieski

            I would have thought that QE2 would decimated demand for T-bills.

            The fact that the Fed could buy up billions of T-bills over a fairly extended period of time without a noticeable impact on bond yields is … interesting.

          • acat

            Okay, here’s one point.

            Since the start of QE2, the Federal Reserve has purchased $491 billion of Treasurys in the Open Market (and $556 billion since the start of QE Lite). This $491 billion in indirect monetizations ultimately ended up funding government cash needs. In other words out of $589 billion in net issuance, the Fed has been responsible for 83.4% of the money needed.”

            I’m certainly no bond trader, but I follow people who follow them.

            I generally don’t put too much stock in Tyler, he frequently takes a shotgun approach, guaranteeing he’ll hit something in all the misses.. but in this case, he’s raised some points that .. if he’s hit anything at all .. will be very dire indeed.

            Even the idea that bond holders are moving from longer-term to shorter-term bonds means .. something. (Bond holders preparing to be able to jump to higher interest bonds once they start appearing, bond holders wanting to be able to cash out and move to ???.. in any case, it’s not a sign of long-term faith…)

            Mew

          • acat

            http://www.zerohedge.com/article/how-fed-sourced-834-treasury-cash-needs-start-qe2

            Yeah, zerohedge… but it was the National Enquirer who took down Silky Pony.

            Mew

  • GregInFla

    Mark Steyn pointed this out sitting in for Rush Monday. We’re the borrowers who are on the hook to pay the debt back, not Congress or the President (who made a couple millions writing books but still would not pay off his college loans).

    Steyn also noted that it is the creditors who determine the true debt ceiling. When that level is reached, there is no more (true) money. I want to know where Obama thinks will give us five trillion dollars. The American people don’t have it. I predict we’ll be paying it off by giving China parts of the American West that the feds own. Or merely the mineral rights.

    • GregInFla

      n/t