Mike Shedlock

My best friend in high school, David Wise, wrote an interesting OpEd for the Baltimore Sun two days ago. I do not agree with all of it, but he does hit the nail on the head of the critical issue as to who is to blame for the default impasse.

Wise says Obama must not allow a default.

I happen to think that a default would not be catastrophic. However, that debate is moot because the odds of a default are a million-to-one, if not higher. So let's get down to the critical paragraph.

Congress has the power of the purse and the power to tax under Article 1, Section 8 of the Constitution. If Congress authorizes too much spending or permits inadequate revenue generation, it hardly makes sense that it can override the results of the exercise of these Constitutional powers by a mere statute, any more than a person who runs up credit cards purchases could try to avoid responsibility for debts by telling the credit card company that the amount exceeded some artificial total amount of debt that he has vowed not to exceed. Alan Greenspan once said in an interview: "Why do we have a debt limit in the first place? We appropriate funds, we have tax law, and one reasonably adept at arithmetic can calculate what the debt change is going to be."

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.