Wednesday, January 16, 2013

Bare Knuckle Politics: The Debt Ceiling

The battle lines have been drawn on the debt ceiling:

  • Republicans are looking at the controlled-crash of a government shutdown.Some of them are even looking forward to it.
  • Obama / the Treasury have tied all their hands behind their backs so there are no Trillion Dollar Coins, government IOUs, or 14th Amendment loopholes.
It's a game of chicken and everyone's claiming the steering wheel's stuck and the accelerator is glued to the floor. Is there a parking break option? Maybe: Obama suggested that congress could just hand over all the debt-ceiling authority to him as Republican Mitch McConnell had suggested earlier.This option would be another "it-got-done-but-I-didn't-do-it" style semantic dodge that would allow scared Republicans to simply watch a government action from a "safe distance"--like sun-glass wearing observers of a nuclear weapon test.

It doesn't seem likely.

Here are some projections on what a debt-ceiling failure would look like:

I Kinda Think We Want The FBI

Or ...

Air Traffic Control Gets Shut Down!? WTF!?
Who will blink?

I Have No Idea
My gut-reaction says that in the 11th hour Obama and Boehner will come up with some kind of deal or "deal" and while both will "lose some credibility" with their base but so what. However, I'm afraid that won't happen and here's why: with the Fiscal Cliff there was an easy-out: go over, just a smidge, and then real quick have vote to "lower taxes." 

That was a purely semantic strategy but it was a workable one. Here there is no such solution: no one can see a good end-game where someone doesn't blink / lose. Both sides have also seriously staked out their positions.

Furthermore: The ball to keep your eye on through this is that the Treasury makes over 100 million payments per month. It is, as I have said here, in NO WAY clear that even if the president ordered scenarios like the above ones, the Treasury systems could make it happen. What might happen instead is that payments go out that can't be "met." It could mean actual fiscal chaos which would be on top of the likely credit rating downgrades and market crashes due to uncertainty. In other words, it isn't about fiscal responsibility after a point, it's about playing bumper-cars with the national economy.

1 comment:

  1. Great stuff, as usual, PO. There is an undercurrent of sinister branding recently that -IMHO - comes into play on this issue. GOP brand has been muddied and tarnished with an "old, greedy, racist, elitist" mallet and the battle here will be colored accordingly. BO can play that card so that if there is substantial REAL damage to the economy, the GOP will get the blame because they _____ (fill in old, greedy, racist, elitist activity here). The wager becomes: do a deal that's acceptable to the Dems, or keep painting yourself into that shrinking little corner you made through the last election cycle. My $0.02.