An economist stopped in Omaha on Wednesday to discuss some of the most pressing financial issues facing America, including raising the debt ceiling.
James K. Galbraith spoke at the Holland Performing Arts Center on Wednesday night. The free talk, titled “From the Crisis to the Crackpots: How We Ended Up in This Mess,” was part of the Holland Lecture Series, hosted by the First Unitarian Church of Omaha with the support of Omaha philanthropist Dick Holland.
Galbraith is an author and a government and business relations professor at the University of Texas.
Galbraith gave his take on Congress’ fight over raising the debt ceiling. President Barack Obama has been calling on Congress to raise the debt limit to avoid a financial crisis, but Congress hasn’t done so yet.
Galbraith said the debt ceiling was created in 1917 when Congress wanted to issue a “mountain of debt” to afford World War I. Congress decided to put a limit on the debt, Galbraith said, but the “limit has been raised every time it has been approached ever since.”
Now, suddenly, Republicans in the U.S. House do not want to raise the debt ceiling and political leaders are talking about default, which is supposed to be an “Armageddon of the financial system,” Galbraith said. But, he isn’t so sure the government will default in the end.
He added that the president and the U.S. Treasury don’t have the authority to choose which payments are made and which are not.
Galbraith asked the hundreds of people in the crowd, “Do you sense a setup? Do you sense that at the critical climactic moment, our political leaders will turn to us and say, well we can pass a continuing resolution, and raise the debt ceiling after all, but we have to compromise as reasonable people and therefore onto the chopping block go Social Security, Medicare, Medicaid, the Affordable Care Act.”
Galbraith pointed to four things that are preventing economic growth in America: the rising cost of natural resources; the U.S. no longer having the authority that military power once provided; improved technology reducing the demand for labor; and the financial meltdown.
“The whole possibility of growth has been curtailed,” he said.