It’s day two of a government shutdown and world stock markets have started to weaken with the debt ceiling limit looming in the near distance.
But David Stockman, former head of the Office of Management and Budget under Ronald Reagan, a former member of Congress, and author of The Great Deformation: The Corruption of Capitalism, insists the shutdown is a “sideshow.”
(Check out the video to see why his background in the OMB and experience with shutdowns leads him to say this.)
He tells The Daily Ticker the real story is the debt ceiling, and he thinks we’re “finally getting to a defining moment when the truth comes out…if we run out of debt ceiling, the president does have the power to prioritize the inflow of revenue which is still massive coming in.”
And the first thing the government will do, he says, is spend $30 billion paying the interest on the debt (according to Stockman, the government could also pay social security retirees, the armed services, and medicare reimbursements despite broaching the debt limit).
“It is a complete red herring to say there will be a default,” he tells us. “There will never will be a time in which there is not enough cash to pay the interest.”
This is contrary to rhetoric from Treasury Secretary Jack Lew, who has indicated to Congress prioritizing payments is just a default by another name.
Stockman argues tea party Republicans should use the debt ceiling to extract concessions from the White House including defunding Obamacare. The “federal budget is a doomsday machine,” says Stockman. And he insists that $2.5 trillion of spending is already mandatory or automatic entitlements that were never voted for by the people in congress today (implying this spending is unsustainable).
“The fiscal process doesn’t work. It’s broken and the only way to get the wheels of this thing to stop turning is for a determined minority to grab the bull by the horns. And if they want to call it 'hostage taking' they can use that term but why do people think we can keep adding to the national debt?”
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