I know we went through a lot of this back in 2011, the last time the debt limit was in play. But a very brief and direct refresher course is in order, and The Atlantic’s Derek Thompson offers one:
The truly scary thing about going over the debt cliff isn’t what we think will happen—a scramble to prioritize payments, delayed checks to groups like veterans and senior citizens, and angry, confused investors.
The truly scary thing is that we actually have no idea what will happen. We don’t know if it’s even possible for the government to prioritize payments to millions of different clients. Households, businesses, and investors don’t know how long they’ll have to wait for their money, whether it’s a defense contract deal, a doctor’s reimbursement, or a Social Security check. And nobody will know how long the nightmare will go on. Our international economic reputation—reflected in our low interest rates, the safe haven status of Treasuries (when everything goes haywire, investors clamor for U.S. debt), and our status as global reserve currency—rests on the assumption that Washington isn’t completely insane.
This is an unprecedented scenario because the whole idea of a separate debt limit distinct from specific spending and taxing decisions is very unusual:
Besides Denmark, no other country I know of asks legislators to vote to pay for something they’ve already voted to pay for. The debt ceiling should not exist. But now that it does exist, it must be said again and again that it does not create new laws. It just affirms that we will pay for old laws. It’s not a smart scalpel for shaving the deficit, it’s a guillotine hanging over the head of the head of the country.
Even when the blade doesn’t fall, it can still have consequences. The Summer 2011 showdown that nearly resulted in default cost taxpayers $19 billion this decade in elevated interest rates as investor panic began to build. That’s the price of playing with the full faith and credit of the United States.
Unfortunately, treating “debt” as an abstraction you can oppose without dealing with the individual decisions that create or eliminate debt plays right into one of Americans’ greatest public opinion contradictions: the tendency to favor spending cuts until such time as they are specified—at which point they are often vociferously opposed. That, along with a gross lack of public knowledge about how debt limits work, pretty much explains the Bloomberg poll finding today, which I am sure is circulating rapidly in GOP circles, showing that 61% of respondents favor making debt limit increases contingent on (unspecified) spending cuts.
That doesn’t mean it would be impossible for Democrats to attack specific policies House GOPers are demanding in their debt limit bill. But once you enter this game, it’s half-over, with Democrats making all the concessions and bearing all the responsibility for avoiding an economic disaster.
This inherently twisted and dangerous game needs to come to an end, right now.
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