The Budget

I would like to make reference to a joke I heard on "A Prairie Home Companion" in 89.3FM this last Saturday. It goes something like this "the only good thing about this budget debate is that we finally know what government jobs are essential"

According to the WSJ "In a speech Wednesday, Mr. Obama will propose cuts to entitlement programs, including Medicare and Medicaid, and changes to Social Security, a discussion he has largely left to Democrats and Republicans in Congress. He also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy." ">WSJ

One of the problems with this debate is that, according to the WSJ, "The U.S. Treasury issues debt to fund the country's obligations, including interest payments. But Congress sets the limit, or ceiling—currently at $14.294 trillion—and the country has roughly $14.2 trillion in debt outstanding. The Treasury wants the ceiling raised now, believing the country could potentially default on its debt July 8."

According to wikipedia "A high debt level may affect inflation, interest rates, and economic growth. A variety of factors are placing increasing pressure on the value of the U.S. dollar, increasing the risk of devaluation or inflation and encouraging challenges to dollar's role as the world's reserve currency."

All I have to say is that the U.S. defaulting on its debt would lead to bigger problems than those we are facing today.