In the New York Times, Carl Hulse writes of the debt ceiling debate:
[I]n the House Republican majority…distrust of the Obama administration runs deep and warnings of economic Armageddon do not seem to be moving lawmakers toward a compromise.
Instead, many Congressional Republicans seem to be spoiling for a fight, calculating that some level of turmoil caused by a federal default might be what it takes to give them the chance to right the nation’s fiscal ship.
Sure, that makes sense. Like how sometimes you crash your car into a tree to teach your kid to wear his seatbelt. That’s a thing, right?
You might try the car crash thing if you claim to fix cars for a living… all these guys really want is to ensure the current administration fails miserably so they can get another shot at the White House.
I don’t buy that argument (that it’s necessary in order to get things right), but is it that much different than someone waaaaay over their head in debt and struggling to make payments declaring bankruptcy in order to “right their household’s fiscal ship?” Sure it sucks for awhile, and your credit goes bye bye for awhile, but sometimes declaring bankruptcy is the best option, no?
Kind of like “eating your peas”. ;-)
Or it could be likened to a passenger in a bus grabbing the steering wheel and yanking the bus into an on-coming tractor trailer in hopes that the bus driver will be killed. Of course other passengers will be injured or killed, but the mayhem is worth it if there are more casualties on the left side of the bus than on the right side.
If we were on the verge of default, then it would be analogous, but we’re not. The debate (and I’ll assume the GOP is arguing in good faith, for the purposes of this post) is about our general trends being unsustainable in the long run. This would be a preemptive default in response to unsatisfactory negotiations.
A default of the US would lead, directly or indirectly, to an amazing loss of wealth, well-being, and life. This isn’t eating your peas — it’s a self-inflicted shotgun wound.
This is one place where I’m glad that our politicians are far too corrupt and indebted to their corporate interests to have any worry that they’d destroy the world economy in such a way. And the bond markets seem to agree.
And unlike, say, Greece, the United States can’t go bankrupt anyway, because we control our own currency and can always print more. That could lead to runaway inflation that destroys the value of the dollar, but that’s a quite different situation, especially since the dollar-denominated debt we owe would become worthless as well.
Comments are closed.