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October 16, 2013

Economist Mark Zandi on Default: "We Will Be Dooming Our Economy and the Entire Global Economy" for Years

By David Corn

The government's debt is not created by the extension of borrowing authority; it is created when Congress establishes entitlements or passes spending bills that require government borrowing. Put another way, raising the debt ceiling does not change the amount of money the US government owes.

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On Monday, I took a shot at Sarah Palin after she wrote, "To suggest that raising the debt limit doesn't incur more debt is laughably absurd. The very reason why you raise the debt limit is so that you can incur more debt. Otherwise what's the point?" In a tweet, I noted, "No, you do it so you can pay the debt you accrued." That is, the government's debt is not created by the extension of borrowing authority; it is created when Congress establishes entitlements or passes spending bills that require government borrowing. If you sign a tuition contract with a college for your kid and need to take out a loan to cover all or part of it, you assume a debt when you enter into that agreement, not when you go to the bank and ask for an extended line of credit. Put another way, raising the debt ceiling does not change the amount of money the US government owes.

Nevertheless, a mass of conservative trolls rushed to Palin's defense and howled about my tweet. Looking for further edification on this matter that I could share with the Palinites, I sent her quote to Mark Zandi, the prominent economist who was one of the policy advisers to the McCain-Palin campaign in 2008, and asked him to evaluate it. Zandi, who is now chief economist of Moody's Analytics, emailed back with a bigger message:

Please go to Mother Jones to read the rest of this article.



Submitters Website: http://www.motherjones.com/

Submitters Bio:
David Corn is  Mother Jones ' Washington bureau chief. For more of his stories,  click here . He's also  on  Twitter  and  FacebookRSS  |    David is an  MSNBC analyst & author of the new book, SHOWDOWN: The Inside Story of How Obama Fought Back Against Boehner, Cantor & the Tea Party

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