This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Super Committee: Failure Isn't an Option

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- Squabbling on the super committee; political leaders putting politics and re-election ahead of the nation -- again. America is in the midst of a crisis and politicians are worried about their popularity. Getting re-elected should be the least of their worries.

If the super committee decides to roll the dice like Congress did in August or go for minimum cuts, put your seatbelt on. This will inspire more discussions on credit downgrades, settling trades in a currency that isn't the greenback, and reform of the global monetary system, which has the dollar's primacy as a reserve currency in its sights.

Would the discussions lead to action? A failure of the super committee would add a ton of fuel to the fires that are already burning under these discussions. The world at large is tired of the American superpower's privileged currency residing in a house of financial ill repute.

The nation can't afford to change the color of these fiery discussions from red to white; this will expedite the pace of examining dollar alternatives. Accelerating any action that would lessen demand for dollars and consequently raise the interest on the nation's debt cannot be an option. The committee needs to douse the flames not fan them.

According to the Congressional Budget Office (CBO), if interest on the debt goes up 1%, that adds $1.3 trillion in interest expenses over 10 years. If it goes up 3%, that adds nearly $4 trillion. Not coincidentally, the first amount is about what the super committee is charged with cutting, and the second is the amount the experts say needs to be cut. Rolling the dice or coming up short could be a double or nothing bet.

Beyond this though, a failure to address the nation's big problem of spending beyond its means will be demoralizing to Americans -- again. Do Americans really need to hear again that another nation or credit agency has "lost confidence" in the U.S. government to make decisions?

Politicians must have a very low opinion of the average American IQ if they think they'll be punished for responsibly addressing the world's largest public debt problem. Of course, they are aware of the sentiments of key constituents. AFL-CIO president Richard Trumka recently said, "I would have a tough time envisioning us endorsing people who actually voted for major cuts to Social Security, Medicare or Medicaid... it would make our job significantly more difficult in mobilizing our members around a candidacy."

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $127.60 2.28%
FB $83.09 2.87%
GOOG $535.38 2.16%
TSLA $205.27 -0.74%
YHOO $44.66 0.46%


DOW 18,034.93 +208.63 1.17%
S&P 500 2,100.40 +19.22 0.92%
NASDAQ 4,994.6020 +62.7870 1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs