Opinions, Context & Ideas from the TPM Editors TPM Editor's Blog

Change The Terms

Sound over dramatic? It's not.

The nation has a large national debt. We're also currently running a large annual deficit -- for some reasons that are structural and others which are tied to the consequences of the economic crisis of 2008/09. No one of either party has any real plan to take the country out of debt financing this summer. No one. No one even claims to have one. Everybody agrees the debt ceiling has to be raised and will be raised. The consequences of not doing so would be catastrophic, as we'll note in a moment. The question is simply how much Boehner and Cantor will demand for doing what is essential.

Take a moment to consider what is involved in the whole question of national indebtedness. Those who are pressing the issue the hardest argue that at some date in the not-to-distant future, the country will no longer be able to manage the scale of its debt. The costs of financing it will go through the roof as foreign lenders lose faith in our ability to pay it off and/or we'll enter into some mammoth debt crisis. Well, nothing could be more obvious than the fact that an arbitrary decision to stop paying our debts is the only way to trigger the sort of catastrophe these folks claim they are worried about.

Indeed, it's the only realistic way you get the country close to what remains pure fantasy in anything like the near term. Even if you set aside the more apocalyptic scenarios, welching on the national debt is very likely to provide a severe shock to the still fragile economic recovery and woud likely raise the cost of borrowing into the indefinite future -- something that really would make our financial predicament significantly worse than it is.

The whole thing is crazy. It's holding a gun to the head of the country and saying, "Give me what I want or else." Accepting it as a given about how this year is going to be conducted is even crazier. The president needs to start saying now that Boehner and Cantor need to pass a clean no-conditions bill to raise the debt ceiling. You can't negotiate with hostage takers -- not at the local bank heist, not in the Middle East, not at the other end of Pennsylvania Avenue.