Ron Paul thinks defaulting isn't such a bad thing
Ron Paul, the conservative congressman from Texas, doesn't think the panic about raising the debt ceiling is as serious as some would have us believe. In fact he thinks it might be healhy for the nation in the long run.
The man affectionately known as "Dr. No" wrote an op-ed for Bloomberg on Friday titled "Default Now, or Suffer a More Expensive Crisis Later" in which he says that the U.S. defaulted three times in the 20th century and the world didn't end.
"Despite the defaults in 1934, 1968 and 1971, world markets have been only too willing to purchase Treasury debt and thereby fund the government’s deficit spending," wrote Paul, a GOP presidential hopeful.
"If these major defaults didn’t result in decreased investor appetite for U.S. obligations, I see no reason why defaulting on a small amount of debt this August would cause any major changes," the Republican argued.
Paul did acknowledge that losing the pristine AAA rating would hurt, but the longtime legislator said the pain would actually be good for a Congress that he thinks spends far too much.
"If the government defaults on its debt now, the consequences undoubtedly will be painful in the short term. The loss of its AAA rating will raise the cost of issuing new debt, but this is not altogether a bad thing. Higher borrowing costs will ensure that the government cannot continue the same old spending policies. Budgets will have to be brought into balance (as the cost of servicing debt will be so expensive as to preclude future debt financing of government operations), so hopefully, in the long term, the government will return to sound financial footing," wrote Paul, the father of "tea party"-backed Sen. Rand Paul.
-- Tony Pierce
Photo: Rep. Ron Paul (R-Texas) in Iowa in March. Credit: Charlie Neibergall / Associated Press