A couple of weeks ago, I had the pleasure (based on the fellowship, not the subject matter) of speaking at the annual Economic Summit of the Dallas Regional Chamber about the budget problem. There were so many written questions submitted for the discussion period at the end of the session that the moderator could feed in only a few. Briefly this week, I would like to try to answer one question that did not come up during that discussion. In a later entry or entries, I will try to do some more.
This first question is one that I have heard occasionally, but which has never been addressed actually to me. It goes something like this: What would be worse, a federal government default, or running up this enormous debt to pass on to future generations?
My answer, which I perceive from the question would come off as contrarian, would be “default.” It probably will require some explanation.
(To clarify terminology at the outset: The written question used the term “default,” as I suspect did I in the oral presentation. There are strong differences of opinion about the precise meaning of that term. Some believe that only the failure to pay principal or interest on a debt would qualify as “default;” others would say that it means simply failing to pay all of your bills in full and on time. Trying to respect these differences in the following discussion, let me confess that I fall into the latter camp.)