Bad debt ceiling ideas, Part II
Dave Weigel and Brian Beutler both e-mail to say that Rep. Michele Bachmann is not alone in in proposing scary, reckless, incoherent theories of how to hit the debt limit without doing any damage to the economy. Sen. Pat Toomey, whom Weigel interviewed here, has introduced legislation stating that creditors get paid off first (which would mean that the government would shut down operations to use that money to pay off investors). Beutler notes that the Treasury has already declared this plan “unworkable,” as “adopting a policy that payments to investors should take precedence over other U.S. legal obligations would merely be default by another name, since the world would recognize it as a failure by the U.S. to stand behind its commitments.”
I’m not sure if this is exactly the same as Bachmann’s idea, but let me make a different point. Let’s grant the Toomeys and Bachmanns of the world everything their theories need. Let’s say that as long as we pay back our creditors first, the market will leave us alone. Let’s say it all works out fine. It’s still a bad idea.
The market is worried about our long-term debt load. What we need is a plan that puts us on a better path going forward. The ability to do this gradually and thoughtfully is a great gift. But Toomey and Bachmann don’t want to do this gradually and thoughtfully. They want to let the debt ceiling run out and then start trying to cut spending while exempting creditors in real time. They want to do it, in other words, abruptly and riskily. They want to create crisis conditions when we have the luxury of planning. And why?
I’m not the first to note that people often look at the deficit — and, incidentally, at taxes — as a moral rather than economic question. That’s the only view under which this theory makes sense: You don’t raise the debt limit because raising the debt limit would be wrong, even if it’s the smartest move from the standpoint of the economy. But that fails on two counts.
First, our obligations to China do not somehow reside on a more urgent ethical plane than our obligations to seniors. Cutting back on Social Security checks so we can pay our debts to the Chinese central bank might be a necessary decision, but it’s not an obviously moral one. But with that said, debt is not an ethical question. We care about the debt because we care about the economy. The approach Bachmann and some others are taking suggests that they care about our debt more than they care about our economy. That’s like worrying so much about a patient’s weight that you don’t even notice whether he’s breathing.