Oct 09, 2013 at 4:29 pm
Here’s a useful collection of reasons from Matt Yglesias why debt prioritization won’t work, ranging from it’s illegal to it’s impossible.
For those of you lucky enough not to know what I’m referring to, some Republicans are arguing that failing to raise the debt ceiling is no big deal, because the Treasury will have enough cash flow to pay its (our) creditors–everyone else, from contractors to Medicare docs to retirees on Social Security can just suck it up for awhile. It’s only a default, they say, if you stiff your creditors.
Matt disagrees, and so do I. Not paying your bills is analogous to defaulting, and as he points out, it’s likely that there will days when the cash flow<interest or principal payments.
But I’m not sure he’s right about this part:
Stepping back a little, I’d also note that House Republicans can’t have it both ways here. Either the debt ceiling is a major leverage point to extract concessions from the president, or else it’s no big deal. If it’s no big deal, there’s no leverage. If there’s leverage, then it’s because failing to raise the debt ceiling would be very damaging.
I get the logic, but I fear the way they think about this is a) it’s really is no big deal, but b) the President mistakenly thinks it is. Thus, we have massive leverage over that poor, economically misguided dude.
Remember, many of these folks live in thick information bubbles, where “facts” are what they say they are. Kinda makes them a bit tough to work with.
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