The Debt Ceiling Denialists

Oct 8 2013 @ 11:34am

Bouie watches their ranks grow:

No one knows exactly what would happen if the United States breached its debt ceiling—an artificial limit on what the Treasury can borrow to pay its bills—but almost everyone agrees it would be disaster. I say “almost” because a growing chorus of Republicans insist the opposite, that hitting the debt limit wouldn’t cause a default, and even if it did, it’s no big deal for the nation or the world.

Some of the current GOP delusions: the deficit is rising (it isn’t); the debt is currently unsustainable (it isn’t); the public wants Obamacare ended (it’s split on even delaying it); climate change has nothing to do with human-produced carbon emissions (it is, according to almost every single reputable scientist examining the issue). Why are we surprised that the people who predicted a Romney landslide a day before he was trounced might actually be prone to believing in things that simply are not true by any empirical, objective standard? That’s the true danger here. Their epistemic closure is now not just threatening them, but all of us.

Bruce Bartlett has a must-read on the whole topic here. It’s exhaustive and careful and irrefutable. The GOP is currently threatening not just the core stability of the American economy but of the entire global economy. And the ultimate sign of their craziness is that they deny that – against universal agreement among economists for whom the word “catastrophe” keeps popping up – there is any threat at all. A reality check from Bruce:

Wells Fargo Bank economist Scott Anderson has said of a default, “It would be an earth-shattering event. It’s taken as given that U.S. Treasuries are a safe asset. Once you question that assumption, it shakes the foundations of global finance and the way it’s been established over the last 50 years.”

University of California, Berkeley, economist Barry Eichengreen, a world-renowned expert on the international monetary system, warned that a debt default could lead to a run on the dollar if foreigners come to feel that the U.S. is being run by irresponsible leaders. As he put it:

“If there is a threat to the dollar, it stems not from monetary policy, but from the fiscal side. What is most likely to precipitate a dollar crash is evidence that U.S. budgets are not being made by responsible adults. A U.S. Congress engaged in political grandstanding might fail to raise the debt ceiling, triggering a technical default. Evidence that the inmates were running the asylum would almost certainly precipitate the wholesale liquidation of U.S. Treasury bonds by foreign investors.”

A “wholesale liquidation of US Treasury bonds by foreign investors.” This is becoming a national emergency of economically existential proportions. Weigel identifies a source of this delusion:

[Republicans] were told for years that a shutdown would be a disaster for the economy and their party. They were told the same thing about sequestration. Neither crisis has really lived up to the end-of-times hype, especially not in their districts. … Republicans have a new, cold confidence that the president, and the press, are lying to them about the downsides of these crises.

As an example, here’s Hannity downplaying the danger of hitting the debt ceiling:

It sounds a little bit like sequestration. Predictions of doom and gloom, and none of it ever happened. The world isn’t collapsing … I’m really not that afraid of it.

And here is a list of other debt-ceiling denialists. Krugman frets:

Given all the forms of debt denial, I really wonder about the confidence many people still have that there will be an 11th-hour resolution.

I don’t believe there will be. American pseudo-conservatism is about to achieve its paramount goal: the wholesale destruction of the American government and economy. It is, indeed, the only way to return to the nineteenth century. And that, after all, is what they want.