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On Raising The Debt Ceiling

 April 12, 2011 04:58 PM

There was a rather remarkable poll discussed on the political shows last night on how Americans feel about raising the debt ceiling and, while this is likely another one of those "Yes, I'm in favor of cutting the budget deficit, but not if it affects me" sort of responses that is further clouded by the added mystery and complexity of what not raising the debt ceiling would do to the global financial system, the results were nonetheless intriguing.

In an NBC/Wall Street Journal poll, when initially asked about the U.S. adding to its debt after the limit is reached, only 16 percent favored doing so while 46 percent said it should not be raised. The other 38 percent said they didn't know enough about it to offer a yes or no answer.

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But, when additional information was provided, the responses changed dramatically.

When told that failing to raise the debt ceiling would cause the government to default on its debt, as might be expected, the number saying the ceiling should be raised increased from 16 percent to 32 percent. The surprising part came when respondents saying the debt ceiling should not be raised jumped from 46 percent to 62 percent.

It would seem that Americans view the nation's finances much as they do their own and that the government should tighten its belt sooner rather than later just like them – if that means short-term pain for long-term gain, then, so be it.

Moreover, the whole idea of "defaulting on your debt" doesn't have the same stigma since millions of homeowners started doing it after the housing boom went bust, so, maybe they figure it's not such a big deal.

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It's hard to disagree with either of these views, however, I'd be curious to know what the response would have been if they were told that not raising the debt ceiling would result in a financial market crash like 2008. Would they then stick to that view?

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