Pittsburgh, Pennsylvania – July 17 –
President Obama: “Don’t call my bluff”
This is an admission that the President of the United States is gambling. One of the gambles he is taking is that the interest rates on the United States debt will increase; dramatically. The interest on the debt is $251 billion. The average interest rate was around 3 percent in June, 2011. If the US credit rating is changed, the interest rate is estimated to go up 0.25 percent. If the interest bill was $30 billion; it would go to $40 billion. $251 billion would go up to $335 billion. Imagine what the interest payment would be if the rate went up 1 percent or more instead of 0.25 percent.
The president of the United States wants what he thinks would be good for him and his party. A big debt limit increase with increased taxes. A bit of caution would be nice. A small increase with a balanced budget. That hasn’t happened in the past, but the Republicans are going to try to pass a bill in the House in the next few days, which would do just that.
So take your pick. Proceed with caution or accept president Obama’s bluff. If president Obama’s bluff is accepted, the results might be like the results of forced austerity in Greece.