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Wednesday, October 26, 2016

What Are Conservative Experts Saying About Breaking Through The Debt Ceiling?

What Are Conservative Experts Saying About Breaking Through The Debt Ceiling?

There was a fantastic piece in The Atlantic back in 2000 about psychiatrists dealing with people who wanted to have their limbs cut off because it would make them feel more like themselves to be amputees. The doctors’ big dilemma was whether or not to treat “apotemnophilia” as a diagnosable mental illness. If they engaged with it as a mental illness that existed and was recognized by the medical community, they ran the risk of encouraging more patients to identify with it.

I have the same feelings about engaging in a debate over whether or not breaching the debt ceiling matters. I don’t want it to become a debate that people have, because it will get coded as yet another partisan thing pundits fight about, and thus reduce the seriousness with which we should regard the situation. That, in turn, could make a default even more likely. This is a problem we face because of the he-said/she-said coverage of political topics in most U.S. media.

Right now, many House Tea Party members believe that a default is impossible because we can prioritize interest payments to go first. There have been really great pieces written lately about going through the debt ceiling and what it would mean for the economy; Kevin RooseGreg Ip, and Matthew O’Brien have pieces that are particularly worth your time.

At a baseline, what they tell us is that even if that kind of prioritizing is possible, the legality is in doubt, we could still miss a payment, the economy would go into a recession from the sudden collapse of spending, and even flirting with this possibility has a bad effect on the economy. We also simply don’t know if prioritizing would work.

But I wanted to get a sense of what the right wing is hearing on this topic. In order to do that, I contacted three major conservative think tanks to ask for a comment from their experts “about the economic consequences of the government defaulting on its debt if it goes through the debt ceiling.” Here’s what I got.


The Heritage Foundation immediately responded with a quote from this post, stating, “Congress still has some time and options. Even if the debt limit is not raised by mid-October, Boccia writes, ‘the Treasury would not necessarily default on debt obligations,’ as it can ‘reasonably be expected to prioritize principal and interest payments on the national debt, protecting the full faith and credit of the United States above all other spending.’”

They added, “In other words, risk of a default is practically nil — unless the President and Treasury choose to default, an unprecedented and almost inconceivable course of action.”

In short, Heritage’s position is that if there’s a default, it will be because the president chooses to default.

Cato Institute

The Cato Institute put me in touch with their senior fellow Dan Mitchell, who said, “I think the likelihood of an actual default is zero, or as close to zero as you can possibly get, for the simple reason that the Treasury Department has plenty of competent people who would somehow figure out how to prioritize payments.”

But wait, does the Obama administration have the legal authority to do something like that? “From what I understand. I’m an economist, not a lawyer. It’s a gray area.”

But isn’t it complicated to prioritize debt payments? “Interest on the debt is paid out of a different account than other government spending. So the argument that there’d be a lot of difficulty and challenges to prioritizing most payments is true, because it’s automatic.” However, “interest payments on the debt are apparently out of a different account, which presumably means that that it would be relatively simple to make sure that happens.”

But certainly it would cause some financial panic, right? “Will there be some economic repercussions? Financial markets I’m sure would be worried as we’d be in uncharted territory… Yes, I’m sure there’d be some anxiety. Especially if Bernanke or Lew or somebody like that is saying something that triggers concern, and spooks the markets.”

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  • docb

    Nothing here..Sen Grassley [r] brought the bill that exempts the Senate and the House and staff from the ACA…not the President..That is the new repub bagger lie! They never can win with truth or honesty..
    Who elects these terrorist baggers to represent them against the voters best interests!

    All lies all the time.

    • disqus_fsqeoY3FsG

      The Tea Party members and their politicians portray themselves as Purist, Morally Superior with Integrity and Character beyond reproach. Gee Koch Brothers and a couple of pals have brought and paid for the Tea Party and their Politicians – that sounds more like Corruption than Purists. Selling your principles to the highest bidder is not the moral high ground. You claim to love this Country but all your actions say the opposite, you hate people who don’t share your point of view, you have no respect for the laws of our great nation and you have no respect for Democracy. Gerrymandering, lying, voter suppression laws show that you have no Integrity and Character. I have much more respect for the ladies of the evening who sell their bodies because they are honest about who they are and what they do. The Koch Brothers Whores (tea party and their politicians) lie about who they are and pretend to be something they are NOT.

      • docb

        You can NOT pretend to sell ‘principles’ that you do not have…They have NONE! As to ‘christian’ that is fake as well..The Jesus of their purported faith would run them out of the temple! It is they who are using religion for political expediency!

        Immoral, contemptible, and reprehensible!

  • 4sanity4all

    Good grief, these idiots are about to run us into the ditch, and they stubbornly refuse to deal with reality. The bad news is, they will send our economy into an even worse recession than we have been having. The faith and credit of the United States will take a world wide hit. We are probably the laughingstock of foreign news organizations. The good news is, after they ruin our economy and our reputation, voters will run the Tea Baggers into oblivion, which they will have earned.

    • Sand_Cat

      Don’t count on the voters’ penalizing the Tea Party. Over 40% voted for Romney. Even more voted for Bush (twice). Seems like half the state legislatures in the country are dominated by these morons. I’m not sure “the voters” will even be able to vote by the time these guys get through. Don’t get me wrong. I agree with everything else in your post, and I most fervently hope that the light will finally come on before it’s too late, but past experience says otherwise. Even if the whole world tanks as a result, there will still be many, many people who will happily blame Obama, who after all “chose” to shut down the government instead of sitting down and negotiating, and we all know that we won’t default unless Obama chooses to. And even if they don’t buy that much, it still happened on his watch, so it must be his fault. Come to think of it, if he hadn’t let them mop the floor with his face for so long, maybe some of this insanity could have been stopped, but I guess he at least performed the service of showing people what they’re dealing with, even if most of them are too stupid to see it still.

      • Dominick Vila

        We have seen evidence of that when many among us blame President Obama for the 2011 credit rating drop.
        What is really important at the moment is not so much who is the most responsible party for the ongoing impasse, but finding a way to get out of the mess we are in. If this continues, there is a good chance our economy – and the global economy – will be impacted, our credit ratng will drop to nothing, our ability to borrow to offset the consequences of refusing to pay for the things we need will evaporate, unemployment will rise immediately, and consumer confidence will erode. Defaulting on the debt is not an option, it is national suicide.

  • Lynda Groom

    What are conservatives saying about breaking through the debt ceiling? Nothing of a reasonable or informed nature….at least not so far.

  • progressiveandproud

    Try reading some news reports from overseas. We are the laughingstock of the world. These repug stooges for the 1% will ruin this country for the 99% while the 1% laugh all the way to their foreign banks.

    • morbius777

      I totally agree…. which is why PROGRESSIVES should start to push for a serious discussion about the right’s secession.

    • bernieo

      I doubt that. While I know they think we have gone off the rails they also know we can destabilize the world economy hardly a laughing matter.
      We just pulled all of our investments out of the market. I hope that a lot of people do this now. The market starting to tank is one thing that might finally scars the big money guys funding the crazies into cutting them off and supporting rational people.

  • Rick2101

    The 80 Congressional Representatives, symbolizing approximately 16% of the electorate, that are refusing to increase the debt ceiling are from very conservative districts and have virtually no chance of losing their seats in the House. They will keep their jobs in 2014 no matter what happens.

    I believe one of the biggest problems is gerrymandering; allowing politicians to draw
    their own political boundary lines distorts the electorate.

    In addition, when the Popular Vote is different from the Electoral College the Popular Vote should prevail. Voters, not a mathematical formula, should determine election results, in a Democracy.

  • howa4x

    The issue is not only interest payments but the fact that 28 million seniors would be without a check that they depend on to live. The majority of seniors don’t have an economic cushion, and their Medicare bills would not be paid. That should make them love the tea party right? But here is another issue. Right now with the government closure the social security administration is closed, and that means no new applications. This is coupled with most of treasury furloughed so there will be a back log in both departments to get caught up. If the tea party thinks there will be no backlash they are delusional. Before this self made crisis, seniors already had some distrust of the tea party which they see as too extreme. They make up one of the legs of the stool and the GOP depends on them for the vote. If they are put in crisis by the tea party they will leave in droves. Couple all that with all the defense contractors and all the other government vendors that won’t be paid. There are already furloughs at some of these business because of the shutdown, so expect layoffs to start. This will put a spike in the unemployment numbers and cause the economy to go into a tailspin. All this will drive stock prices down by at least 200 pts which will affect every 401k. For tea partiers to even broach the subject shows their utter stupidity when it comes to financial matters. This head in the sand or up their own asses will not endear them and may mean the end of republicans as a national party if they go through with it.. This is why I don’t think they would be that stupid but then again you never know.

    • ralphkr

      I must say, howa4x, that all you say makes perfect sense to me BUT you must remember that it shall just be gibberish to the TEA party members because they are unable to understand anything coming from any source other than that sponsored by the Kochs. When the TEAbaggers don’t get their SS or VA checks and their Medicare and VA medical benefits disappear they shall listen to their prophets who inform them that it is all part of a giant Democratic plot orchestrated by the tyrannical dictator Obama and they shall believe every word like the mindless sheep that they are.

      • howa4x

        It amazes me that the people who collect SS and Medicare don’t know enough that republicans are the ones that would put them in peril. Do they have thicker heads than me. I’m 65 and get SS and Medicare and I understand it. What is wrong with these people?

        • ralphkr

          I don’t know what is wrong with them except that they have seemed to have bought into the idea that we should not have anything that is not mentioned in the Constitution but that they shall still collect their benefits. I have acquaintances (I hesitate to call them friends) who seem completely reasonable until they start in on politics and then it is as if I am attempting to discuss quantum physics with a mentally challenged 4 year old. By the way, I turned 65 in the 20th Century and I do NOT get SS or Medicare (too many years wasted in military, LEO, and other jobs not subject to SS at the time) but I shall fight for the right for others to receive the benefits that they have paid for.

  • Lovefacts

    Yes, their experts are just as correct about this as they were about Romney winning the election. The only hope the country has is for Boehner to assume the Speakership of the House, and forgo being Speaker of only the Republicans. Unfortunately, I doubt he can do so given he’s too weak.

  • S.J. Jolly

    To sum up the conservative think tank position: “We should go ahead and jump[ off that 10 story building. We might manage to survive the fall.”

  • Bryan Blake

    Interesting that a picture of the Cato Institute is at the top of the article. The Cato Institute was founded as The Charles Koch Foundation in 1974, and changed its name to the Cato Institute in 1976 (source Wikipedia). It is simply the leading Right Wing Libertarian think tank in our beleaguered nation. With its great infusion of Charles Koch’s money it is actively trying to implement an already thoroughly discredited political and economic position. The Koch brothers and their fellow ultra-rich politically active Right Wing Libertarians are working to: 1. To shred the Constitution and the political and economic rights of We The People found therein; and 2. Transform the inequality and inhumanity (mitigated somewhat by the Federal Government) found in the current weak incarnation Monarchianism Capitalism into the ultimate servitude of the common person to the concentration of wealth found in under just another new name: Right Wing Libertarianism. Of course Koch money created and sustained the Tea Party. The Heritage Foundation was founded in 1973, by Paul Weyrich, Edwin Feulner and Joseph Coors (source Wikipedia). Today it is also a part of Koch Foundation Associate Program (source Wikipedia). The warping of the American Right Wing is found in the wrapping of mainstream Conservative thought with Right Wing Libertarianism.

    As I have said before many of The Founders were fearful that the ultra-rich which they called “the landed gentry” would take over and pervert the American Revolution. The Gentry did and is on the verge of winning.

    BUT we saw the Koch brothers blink today and have to accept (probably unforeseen by them) consequences of funding and advocating political lunacy. They sent a letter to Congressional members decrying the highly probable default on our debt brought about by the very people they bankrolled in large part. The Koch brothers are highly intelligent and educated men. But still they are just men. Their first public ownership of their nefarious political activities clearly demonstrates that they are men who also MAKE MISTAKES AND MISCALCULATIONS! For that we can be very very grateful!

    They are NOT INVINCIBLE! We The People still have the ability to defeat the tyranny of their vast sums of money. And We Will!