The scariest thing I’ve ever heard on television
By Ezra Klein,
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At about the 1:50 mark in the clip atop this post, I make a face I’ve never made on television before. The segment was on the debt ceiling, and “Last Word” host Lawrence O’Donnell played a clip of Rep. Michele Bachmann giving her plan. In short, her plan is that we don’t raise the debt ceiling, but we use the revenue still coming in to pay off creditors first and whatever we think most important second. That way, we “don’t violate our credit rating” and “prioritize our spending.” Makes perfect sense.
At least, it makes perfect sense unless you, like me, had spent the previous few days talking to economists, investors and economic policymakers about what could happen if we start playing games with the debt ceiling. Their answers were across-the-board apocalyptic. If the U.S. government is so incapable of solving its political problems that it can’t come to an agreement on the debt ceiling, they said, that’s basically the end of the United States as the world’s reserve currency. We won’t be considered safe enough to serve as the investment of last resort. We would lose the most important advantage our economy has in the global financial system — and we’d probably lose it forever. Skyrocketing interest rates would slow our economy and, in real terms, make it even harder to pay back our debt, which would in turn send interest rates going even higher. It’s an economic death spiral we associate with third-world countries, not with the United States.
Bachmann’s is presented as a sober plan for repaying our debts, but it’s actually pure fantasy. The chain of events she’s proposing looks, in practice, something like this: She and a group of hard-core conservatives in the House block an increase in the debt ceiling that both the political system and the financial system think to be crucial. So here already the markets are terrified. In her explanation of events, the hijacking of American economic policy by a committed band of ideological extremists doesn’t bother the markets because of the Bachmann and Co. promise to pay investors back first, even if that means not sending out Social Security checks. But that’s not credible.
Rather, it would be evident that the American political system had completely broken down. We’d be in uncharted, uncertain economic territory. It’d be a proven fact that politics was operating based on a new set of rules, and just as this outcome wasn’t predictable, future outcomes could no longer be confidently predicted either. This is far beyond anything proposed by the hostage-taker lawmakers: They’re at least granting that the debt ceiling needs to be raised, and even if it’s not wise to demand concessions in exchange for taking a vote, it’s also not unheard of. Bachmann is saying something very different: that it shouldn’t be raised and that no one should fear the aftermath. Her plan is the equivalent of setting off a bomb at the center of the U.S. economy. And that’s why, at 1:50 in the video above, my eyes get so wide. I legitimately didn’t realize that anyone in American politics was making such breathtakingly irresponsible arguments.