Destructive Economic Myths | Richard W. Rahn | Cato Institute: Commentary

Destructive Economic Myths | Richard W. Rahn | Cato Institute: Commentary: "If the debt ceiling is not raised, government officials will have a choice to default on the interest payments (less than 10 percent of the government's total income) or cut spending. Sen. Pat Toomey, Pennsylvania Republican, has introduced the Full Faith and Credit Act (S.163), which would require the Treasury to make interest payments on U.S. government debt its first priority if the debt ceiling is not raised. This legislation would require the federal government to reduce spending on other activities and/or sell assets, as any business or family would need to do when faced with a similar problem."

"Spending would only have to be reduced to roughly the 2006 level to avoid an ongoing deficit."

"If government spending could bring about full employment, the socialist countries would have been great successes rather than basket cases. Remember, the money government spends on "creating" jobs comes from either taxing or borrowing — both of which take money and jobs out of the more productive private sector — thus reducing the total number of jobs."