Posted 7/18/2011 12:00 am
Updated 2 years ago
The political battle over raising the U.S. debt ceiling to avoid default is the kind of conflict that practically forces commentators to bludgeon readers with clichés: "tug of war," "taking hostage," "Russian roulette" and, our favorite, "playing chicken."
It would be amusing if it weren't so darn serious.
This drama recalls the autumn of 2008 when Congress again held the fate of the economy in its hands as it weighed whether to approve the $700 billion bailout of the U.S. financial system. The credit markets started seizing up, stocks plunged, and then-President George Bush, in a prime-time television address, warned, "Our entire economy is in danger."
Congress eventually did the right though not politically popular thing and approved the package. Thus did TARP give birth to the Tea Party, and in 2010, still-seething American voters gave the U.S. House of Representatives to Republicans.
Our deadlines at Arkansas Business mean that we're left with a cliff-hanger (sorry) to rival anything Hollywood ever filmed. The ratings agencies are threatening to downgrade the credit of the U.S. government should the debt ceiling not be raised by the Aug. 2 deadline.
What would happen then? Nothing good is the generally agreed-on conclusion, though some - mostly those sent to Congress by November's election - are willing to risk the consequences. Unfortunately, those consequences will affect many more people than just the members of Congress.
The Economix blog of The New York Times recently rounded up some predictions and opinions from across the political spectrum:
- "While some think we can go past August 2nd, I frankly think it puts us in an awful lot of jeopardy, and puts our economy in jeopardy, risking even more jobs."
- "Potentially the entire world capital markets could decide, you know what, the full faith and credit of the United States doesn't mean anything. And so our credit could be downgraded, interest rates could go drastically up, and it could cause a whole new spiral into a second recession, or worse."
- "We don't need to tell the rest of the world that anytime people in Congress start throwing a tantrum that we're not going to pay our bills."
- "The debt-ceiling trigger does offer a needed catalyst for serious negotiations on budget discipline, but avoiding even a technical default is essential. This is a risk our country must not take."
- A letter circulated by business groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers
We're left hoping that this time, as in October 2008, Congress will find the courage to do the right thing, not the right thing politically, not the expedient thing, but the thing that leadership requires: End the default melodrama, raise the ceiling and return to addressing the very real problem of the deficit and a still-struggling economy.