Equally salutary is the air of crisis that will be generated by the fear of default. We shall have a preview of what happens when we hit the real debt ceiling several years from now, i.e., face real default. That’s our current fiscal trajectory. Under President Obama’s budgets, debt service, now $214 billion a year, climbs to $931 billion in a decade.
http://www.nationalreview.com/articles/268707/our-salutary-debt-ceiling-scare-charles-krauthammerThe current debt-ceiling showdown, therefore, is an instructive dry run of an actual Greek-like default, which awaits if we don’t solve our debt problem.
With one difference, of course. During today’s debt-ceiling fight, if the markets start to get jittery, interest rates on U.S. debt spike, and the economy begins to teeter, the whole thing can be called off with a push of a button — an act of Congress hiking the debt ceiling. When the real crisis comes, however, there is no button. There is no flight-simulator reset. We default and the economy really does crash.
Which is why the current debt-ceiling showdown is to be welcomed. It creates leverage to force fiscal sanity.
So, facing in a few years what the Greeks face now, will US politicians be able to choose more wisely?
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