Does any reader out there think that people in the government actually know what they are talking about? If so, you can just disabuse yourself of that idea by reading the op-ed by Alan Blinder in today's Wall Street Journal. Sorry it's behind the pay wall, but the link will take you to where you can get in if you are a subscriber.
Who is Blinder? Currently a professor of economics at Princeton, but just recently Vice Chairman of the Federal Reserve. Shouldn't somebody with those kinds of titles know at least a little something about basic public policy? OK, here are a few key quotes:
At current rates of spending and taxation, federal receipts cover less than 74% of federal outlays. So if the government hits the debt ceiling at full speed, total outlays . . . will have to be trimmed by more than 26% immediately. That amounts to more than 6% of GDP, far more than the fiscal cliff we just avoided. . . .
Bad things will surely happen, one of which will be a swift descent into recession.
Blinder is completely ignorant of economic history, which shows that sharp cuts in government spending and in the size of the government are the cause of economic booms, not recessions. Read my previous post here and the linked article by David Henderson for more detail.
It is beyond breathtaking that our top government officials operate at this level of ignorance. And if you think that anyone at the Fed in Washington, or in the Treasury Department, or in the White House (including the top guy) knows any better, you are wrong. (A few people in some of the regional Feds do know better. They are a small minority and their voices are at present barely being heard.)