Elizabeth Warren: "Stop the presses: I agree with Wall Street."

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elizabeth warren via New York Magazine

I get emails:

Laffy,

The United States Treasury says that in exactly one week, it won't have enough money to pay the government's bills.

We're not in this position because President Obama or the Secretary of the Treasury spent more than they were supposed to. And we're not in this position because investors refuse to buy our bonds.

We're in this position for one reason, and one reason only: because Congress told the government to spend more money than we have, and now Congress is threatening to run out on the bill. This isn't about new spending. This is about paying for the bills we've already run up.

The idea that we can renege on our debts without paying a high price is a fantasy – a very dangerous fantasy.  

We must raise the debt ceiling – and we must do it now. Tell Congress to do its job, pay our bills, and prevent the first default in the history of the United States.

Consider what happened in 2011, the last time the government came to the edge of a voluntary default.

Even the possibility that the government would not make good on its debts spooked investors and pushed up interest rates. According to experts, even talking about default cost the government $19 billion over ten years.

And consumers and businesses got spooked too. The S&P index dropped by 17 percent. $800 billion dollars in retirement assets vanished. Mortgage rates went up nearly three-quarters of a point. The result was less consumer spending, fewer business investments, lower home ownership rates, and slower job growth.

That's what happened the last time Congress came to the edge of a voluntary default. What happens if we actually default?

Some economists estimate that the rise in interest rates will cost us $75 billion a year. Social Security checks and Medicare reimbursements will be delayed. People won't be able to pay their mortgages or small business loans. Interest rates will spike, and the credit market could freeze.

If we default on our debt, we could bring on a worldwide recession – a recession that would pummel hard-working middle class people, people who lost homes and jobs and retirement savings and who are barely getting back on their feet.

I don't always see eye-to-eye with Wall Street CEOs, but on this one we agree: We can't run out on the bill and cause financial calamity for working families.

Tell Congress to stop playing with the lives of every American and start doing what the American people sent us here to do. Raise the debt ceiling and pay our bills now.

This fight is about financial responsibility. I can think of a lot of things we could do with $75 billion dollars. We could ramp up Meals on Wheels and Head Start. We could give students some relief on their loans. We could invest in more medical and scientific research. We could pay down the debt.

But if we default on our loans, we've just flushed money down the drain. That's about as irresponsible as it gets.

For many things that we do in Congress, we can make a mistake, and then back up and fix it. A default on our national debt is not one of those things. If we default, this country will pay.

We are the United States of America. We always pay our debts – in full and on time. That's who we are.

Thank you for being a part of this,

Elizabeth

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  • http://thepoliticalcarnival.net/ GottaLaff

    This "educated Indian"? Why would you go out of your way to describe her that way? Scott Brown lost the election to her in part for doing the same.

    This is why Republican poll numbers are in the toilet. And even if you're not a Republican, you sound like one, and that's about as big an insult as I can come up with while still remaining civil. You're banned. We do not allow bigoted ignorami like you to infect our threads.

  • TrinainUS

    Warren isn't speaking of incurring new debts. She's talking about paying previously acquired debt, most of which dates from previous conservative administrations/Congresses. Please take a look at debt and deficits over past years. The only decreases have come under the administrations of Clinton and Obama. This goes back at least to the Reagan presidency.

  • Dis

    This educated Indian knows full well that American business schools teach their students that a going concern must employ husbandry, i.e. Simple household economics. You cannot spend more than you take in. Progressives simply do not believe this truth, they like Elizabeth believe you can spend first then collect the money from others or borrow at huge rates in their name to pay the bills. Now that is just plain wrong.