Sunday, May 22, 2011

A disruptive series of events ...

@noahkgreen (via @Bricoleur) reports that Toomey Brushes Off Debt Default Danger. @davidfrum calls this The GOP’s New Line and suggests that "Debt default is looking less like a game of chicken, more like GOP self-hypnosis". See also Political siege on as US debt hits the ceiling (Press TV, 21 May 2011).

Does Senator Pat Toomey really think defaults don't matter? He is quoted as saying “A disruptive series of events are not a catastrophe” (via @DCMorningCall). Reuben Gann calls this "horrifyingly ignorant" (People, we are heading off a cliff).

Similar events recur at regular intervals ...

"The United States is close to averting the first default in its history after the Senate overwhelmingly passed an eleventh-hour compromise deal to re-open the government and raise the debt ceiling until early next year." Peter Foster, US default: Senate passes deal to lift debt ceiling and re-open government (Telegraph 17 October 2013)

"The merry-go-round over the debt ceiling, which needs to be raised by Congress in order to pay for expenditure that has already been authorised, is a common feature of Washington politics. Historically, both parties have used the threat of a default to force concessions from the administration, insisting that policy concessions are attached to any bill that raises the Treasury’s borrowing limit." Paul Lewis, US turns to 'extraordinary measures' on debt but GOP will not use default threat (Guardian 7 Feb 2014). See also Linda Yueh, Spectre of US default (again) (BBC News 4 Feb 2014)

Perhaps the question isn't whether defaults matter, but to whom they matter most. Advantage in a negotiation often lies with the side that appears to be unconcerned and unhurried.

"Whatever the Republicans do or do not negotiate before they agree to raise the debt ceiling (as they surely will), the important thing is to ignore all the threats, lies, and warnings of impending doom. Everything will be okay in the interim until the debt ceiling is raised. The sky will not fall. Life will go on. The government shutdown in October showed that the country functions just fine without parts of the government. We can survive without an increase in the debt ceiling, too. So relax and focus on your pool for the Oscars or the Super Bowl. The country and economy will be fine." Jeffrey Dorfman, Debt Ceiling Déjà Vu: The Government That Cried Wolf  (Forbes 25 January 2014)

Updated 19 April 2014

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