Surviving the debt ceiling crisis unscathed: highly unlikely by Marjorie Arons-Barron
The entry below is being cross posted from Marjorie Arons-Barron’s own blog.
At times, the debt ceiling debate has resembled a schoolyard brawl. We’ve heard everything but “so’s your mother!” But this squabble, now a bloody slugfest, has gotten very dangerous and, even if resolved, will have serious consequences for our nation.
Many experts now believe that Standard &Poor’s (or some other agency) will have no choice but to downgrade our credit rating. The manner in which our leaders have repeatedly failed to resolve what should have been a routine transaction will, according to many, inevitably lead to a loss of our AAA rating, raising interest rates and costing ordinary individuals more for mortgage, consumer credit, and student loan borrowing. (The Boehner plan would not avoid the downgrade threshold of the rating agencies.)
Our leaders’ reckless behavior has already hurt the nation’s reputation in the global community. This is no longer a country that everyone can depend upon to do what’s right, in a timely fashion. We have squandered our leadership credentials.
Even if the debt ceiling is raised by August 2, the factors that precipitated the brouhaha will remain unsolved. My former colleague Phil Balboni, CEO of GlobalPost.com , has just launched a weekly commentary series and, as always, has summed up expressively the profound and sweeping nature of our difficulties. China, for example, is now seeking alternatives to some of its US bond investments.
There are plenty of reasons things went from bad to worse and much blame to go around. It’s staggering that one of the most feasible outcomes of a debt ceiling resolution will be the creation of, yet again, a new bi-partisan commission to deal with our long-term indebtedness. Can you say “Simpson-Bowles?” “Rivlin-Ryan?” Equally appalling, depending on what is decided this week, is that we may have to go through the whole messy debt ceiling process again in six months.
President Obama vowed to veto any solution that would be a short-term fix. But the Republicans have rolled Obama, and he hasn’t so far been up to the task. (Knowing the Republicans would likely block a clean vote on raising the debt-ceiling, why didn’t he last year make it part of the Bush tax cut extension?) It seems now unlikely he would actually veto any debt ceiling bill, however undesirable, if it gets to his desk. He doesn’t want to own a default.
Obama seems to have yielded on nearly every point, and I wouldn’t be surprised to see him cave on the short-term fix as well. The GOP is trying to leave him without any choice. The Republicans want this to be an issue in an election year. Obama does not. In this regard, his political interests and the country’s best interest coincide. It’s ironic that when people really understand the details, they side with Obama.
A National Journal poll showed that 46% trust Obama most to “make the right decisions” on the deficit while 34% said they place more faith in congressional Republicans. Regarding the debt ceiling, a virtually identical 46% leaned toward Obama and 35% chose the GOP. But Americans are split on whether there is any need or urgency to raise the debt ceiling in the first place.
Clearly, President Obama he has repeatedly failed to use his bully pulpit effectively enough to educate the public about the dangers of default.
It doesn’t matter to the Republicans. Goaded by their Tea Party members, they seem intent – like the Slim Pickens character in the last scene of Dr. Strangelove – on riding the bomb to oblivion, waving their ten-gallon hats and crying “yee-hah!”
Please let me know your thoughts in the comments section below.