Washington is hyperventilating at the prospect of a failure to meet the deadline for raising the national debt limit.
Technically speaking, that indeed would create a grave situation with immeasurable consequences. For the United States will have no legal authority to pay its bills – including the interest on its trillions of debt. A large portion of that debt is in the form of Treasury securities is held by foreign governments, most notably China and Japan.
The commonly held view is that this dire state of affairs is due to partisan party conflict with both Democrats and Republicans holding the national interest hostage to their own selfish interests.
This depiction of things, which is purveyed by all the media, has been reinforced even by President Obama – for his own political reasons in posing as the intrepid defender of the national welfare who stands above the squabbling politicians on both sides. The White House imprimatur notwithstanding, this is a false representation of what is happening.
The grim truth is that one political party (and only one) – the Republican – has broken with the ethic of responsibility that until now has governed thinking and behavior on the public debt. The Federal government’s obligation to meet its financial obligations to honor debt never before has been questioned.
The notion that some partisan faction should threaten the solvency of the United States by blocking technical requirements unless its parochial aims were accepted did not enter the mind of legislators.
Times have changed. The radical reactionaries who now control the Republican Party are threatening in effect to bring down the financial structure of the United States. They insist that their agenda of drastic measures to return the American economy, and large swaths of social policy too, to the postulated heyday of the 1920s be enacted.
Remarkably, they have succeeded in getting the country to see this reckless ploy in terms of a contest between the two parties rather than as playing fast and loose with America’s health and well-being. Moreover, they have intimidated the Democrats in Congress into a reticence that permits the Republicans to get away with this historic and unprecedented power grab.
As for President Obama, he has played along insofar as he has declined to condemn in stark terms the Republican blackmail. Instead, he has accepted the formulation that the crisis is all about budget deficits and the needs for long-term spending cuts.
This makes no sense politically or in terms of economic policy since it is a guaranteed formula for ensuring a decade at least of economic anemia. It seems that his overriding consideration is that this spin strategy will improve his chances for reelection. Whether that appraisal is correct or not, it does not auger well for the health of the Republic.
(Professor Michael Brenner teaches at the University of Texas at Austin, and also at the University of Pittsburgh. He can be reached at: firstname.lastname@example.org)