Taking on bad debt

David Kay Cay Johnston with some clearheaded writing:

The Administration has scared the markets and some key legislative leaders, but it has not laid out a coherent, specific and compelling need for this enormous proposal, which is the equivalent of a one-time 55 percent income tax surcharge. (Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)

A very good question: If there is no credit going around and this is what is driving the crisis, how does the government expect to pay for this? Obviously the expectation is that the governement will borrow the money. But if this were commercial paper we're talking about a serious downgrade given that the entity will be using the money to take on huge amounts of bad debt. How high will the government have to set an interest rate to borrow the money to take on this debt?

I think much of this credit squeeze is manufactured--an emotional overeaction by a drama queen industry hoping to get stroked back into dreamland through the infusion of billions of dollars into their pillows.