Gerry Canavan

the smartest kid on earth

Debt Ceiling: Damage Already Done?

with 4 comments

UPDATE: Twitter now blowing up with reports that everything is totally effed up.

Moody’s is warning that it will consider downgrading the U.S.’s AAA rating on the grounds that it now “considers the probability of a default on interest payments to be low but no longer to be de minimis.” Schumer:

This is a reminder that the deadline for these negotiations may not be as far away as August 2 or even July 22. It’s whenever the credit markets decide it is. We need to come to an agreement immediately because the irreversible consequences of a potential rating downgrade could occur ahead of an actual default.

Nate Silver shows that the Republicans don’t even have the support of their own voters on this. And here’s Ezra Klein:

Whether you believe this depends on whether you believe that catastrophic delay on the debt ceiling would hurt Obama or the Republicans. Political scientist John Sides says Obama would pay the price. “Presidents suffer the consequences of a bad economy,” he writes.

That’s true. But I don’t think the aftermath would read to voters as “a bad economy.” I think this would look more like calculated economic sabotage on the part of the Republicans. Wall Street would turn on them. The business community would turn on them. The media has already turned on them. And as Social Security checks stop going out and doctors stop taking Medicare because the federal government isn’t paying its bills, the public would turn on them, too.

And Jonathan Chait: “Meanwhile, the evidence that’s leaked out about internal Republican deliberations suggests the Republicans are not shrewdly trying to maximize their leverage. They’re just barking mad.” And Kevin Drum: Yes, The Tea Party Is Insane.

Written by gerrycanavan

July 13, 2011 at 8:00 pm

4 Responses

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  1. 14th Amendment, a nation turns its lonely eyes to you.

    gerrycanavan

    July 13, 2011 at 8:01 pm

  2. Reading Silver’s article, I was somewhat dismayed that “just raise the damn thing on its own” wasn’t an option so I dug a little deeper into the Gallup poll that 538 was referencing. I then remembered that Gallup is good at what is does – they did indeed ask about whether the limit should be raised at all prior to asking what kind of deal must be struck.

    It is not clear what Americans actually want to happen (42% are against raising the limit vs 22% for). Of those saying they are not in favor of raising the limit, most say it’s because the US already has too much debt (38%) or the US is spending too much (21%).

    All of this is to say that, at the very least, Republicans have been very efficient at making a routine implementer of the current budget into a political battleground.

    EMG

    July 14, 2011 at 12:10 pm

  3. […] * Sabotage accomplished: S&P warns there’s a 50 percent chance it will downgrade US credit rating within 3 months. This is really, really bad. […]

  4. No one has actually explained how either decision would affect the american people. Macro economics are not easily understood. I forget… what was the amount that president Obama gave to the banks, that was supposed to go to the people for a mortgage relief ? and it went to the great ones instead. Is there any more information about these loans ? Who is holding them, and what was the money for ? war ?
    My way would be to have all the political people who have been elected, show their expense account weekly or monthly, as the accountants are working on them.. They are working for the people. The people should see where their money has gone to. Why with all the means we have today, is it still kept secret ? I still believe the great meeting of the world could be handled more efficiently, for the right reason, in a modern way, like electronics.. There are new systems now, but I believe it is nice that they can shake hands etc .. . Does the closeness help in any way, and is it worth the money paid out for security and all the flights and foods and lodgings. They always overspend and it is mostly hidden as well. They could start by doing things as if they are poor like the normal public are. Logically..

    Mary Dicerni

    July 15, 2011 at 2:51 am


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