Following up on Rachel’s segment from last night – and for the love of all that is good in the world, I sure hope you watched the Moby Dick production – the world has a serious problem on its hands. More than a few congressional Republicans have convinced themselves that a sovereign debt crisis wouldn’t be so bad and Congress should feel free to ignore the debt-ceiling deadline.
To be sure, there were a handful of extremist lawmakers who made this argument in 2011, during the first-ever Republican debt-ceiling crisis, but they were considered strange policy freaks who were generally ignored.
Over the last two years, however, as the radicalism of extremist Republican politics has intensified, the argument has gone mainstream. Both the New York Times and Politico have lengthy reports this morning on the growing number of GOP lawmakers – some in the House, some in the Senate, some new to Congress, some who’ve had lengthy congressional careers – who genuinely seem to believe the crisis they’re creating on purpose won’t be “that bad.”
The evidence is overwhelming that their argument is, among other things, dangerously insane. What they’re suggesting – the Treasury can simply “prioritize” expenditures to prevent default on our debts – is illegal and literally impossible.
But looking at this genuine madness in the bigger picture, I have three questions I’d like the default deniers and the rest of the political world to consider as the crisis continues.
1. Doesn’t this destroy Republicans’ leverage?
Let’s say the default deniers are right. They’re not, but let’s just say they are for the sake of conversation, and the consequences of the United States ignoring its financial obligations would be minor. If that’s true, why should President Obama and congressional Democrats pay a steep ransom to let the hostage go?
In other words, Republican lawmakers are presenting Dems with the following message: “Meet our demands or we’ll shoot the hostage. And by the way, even if we pull the trigger, the hostage will probably be fine.” I’m not an expert in hostage crises, but there seems to be a problem here.
2. Do the deniers have any credibility?
The default deniers and their allies insist that we should all ignore the economists and financial experts warning of an economic calamity. Indeed, some have been quite explicit on this point: “Economists, what have they been doing? They make all sorts of predictions,” Rep. John Fleming (R-La.) said. “Many times they’re wrong, so I don’t think we should run government based on economists’ predictions.”
But if we look back at the last generation or so, the same people who are saying default wouldn’t be a big deal have also made a series of other economic predictions. They said Clinton’s economic plan, for example, would be a disaster for the country. They were certain that the Bush/Cheney tax cuts and economic policies would produce extraordinary prosperity. They assured us that Wall Street could be deregulated without incident. They predicted that Obama’s Recovery Act would make the economy worse and that his rescue of the auto industry would fail miserably.
And now these same radical charlatans are telling us default would be inconsequential. Remind me why any sane person would listen to them?
3. Do the deniers understand the nature of their gamble?
Let’s say the economists and financial experts are wrong. They’re not, but let’s just say they are for the sake of conversation. Let’s then say that policymakers take their advice and unnecessarily raise the debt ceiling. What happens then? Nothing. Markets would settle and the world would simply move on. If the default deniers are right and we don’t actually have to raise the debt limit, but we do so anyway, there’s no harm done.
But if the economists are right and we fail to heed their warnings, we’re facing the prospect of economic collapse. In other words, if we have to make a choice based on expectations, which of the two scenarios is the safer bet? Congress takes a few minutes to do some routine paperwork or Congress rolls the dice and hopes for the best?
We are, at the risk of sounding impolite, talking about a group of ignorant radicals, with an uninterrupted track record of failed predictions, who have the fate of the global economy in their hands. Good luck to us all.