CHENEY WAS RIGHT ABOUT ONE THING: DEFICITS DON’T MATTER
“You know, Paul, Reagan proved deficits don’t matter.”
Vice President Dick Cheney to former Treasury Secretary
Paul O’Neill, (A. Entous, Reuters, on AOL News 1/11/04)
“Deficit terrorists” are gutting governments and forcing the privatization of public assets, all in the name of “deficit reduction.” But deficits aren’t actually a bad thing. In today’s monetary scheme, in which most money comes from debt, debt and deficits are actually necessary to have a stable money supply. The public debt is the people’s money.
Former Vice President Dick Cheney famously said, "Deficits don't matter." A staunch Republican, he was arguing against raising taxes on the rich; but today Republicans seem to have forgotten this maxim. They are bent on stripping social programs, privatizing public assets, and gutting unions, all in the name of "deficit reduction."
Worse, Standard & Poor’s has now taken up the hatchet. Some bloggers are calling it blackmail. This private, for-profit rating agency, with a dubious track record of its own, is dictating government policy, threatening to downgrade the government’s long-held triple AAA credit rating if Congress fails to deal with its deficit in sufficiently draconian fashion. The threat is a real one, as we’ve seen with the devastating effects of downgrades in Greece, Ireland and other struggling countries. Lowered credit ratings force up interest rates and cripple national budgets.
The biggest threat to the dollar’s credit rating, however, may be the game of chicken being played with the federal debt ceiling. Nearly 70 percent of Americans are said to be in favor of a freeze on May 16, when the ceiling is due to be raised; and Tea Party-oriented politicians could go along with this scheme to please their constituents.