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Tuesday, October 24, 2017

Over at The Daily Beast, Michael Tomasky noticed even Newt Gingrich making sense: “Everybody’s now talking about, ‘Oh, here comes the debt ceiling.’ I think that’s, frankly, a dead loser…The whole national financial system is going to come into Washington and on television and say: ‘Oh my God, this will be a gigantic heart attack; the entire economy of the world will collapse. You guys will be held responsible.’ And they’ll cave.”

Even conservative thinkers at the National Review have grasped what Obama appears to have understood all along: that “the prospect of default…is not a source of Republican leverage in the debt-ceiling fight; it is the primary source of the Democrats’ leverage.”

Then why have so many liberals been running scared? Watching ordinarily astute observers like New York Times columnist Paul Krugman calling for Obama to resolve the impasse by ordering the Treasury Department to mint a trillion-dollar platinum coin and deposit it with the Federal Reserve has been little short of astonishing.

I mean why not a handful of magic beans, or a trailer-load of Monopoly money?

I’d never argue economics with Krugman. I accept his word that the coin would be a technically legal accounting trick giving the Treasury “enough cash to sidestep the debt ceiling—while doing no economic harm at all.”

Politically, however, such a stunt would have been catastrophic. Millions of Americans genuinely worried about government spending would have been thrown into panic. If people don’t grasp the fallacy of comparing their family finances to the national debt—and it’s clear that most don’t—resorting to legalistic chicanery could only confirm their fears. The hard-won Democratic advantage on fiscal issues would vanish overnight.

Besides, there’s no need. According to Bob Woodward’s The Price of Politics, Republicans hoped to stage this spectacle just before the 2012 elections. Obama’s veto threat stopped them.

So now the president’s got the GOP exactly where he wants them.

It’s just taking everybody a while to figure that out.

Photo credit: AP/Carolyn Kaster

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