Thursday, July 14, 2011

The Debt-Limit Crisis Explained

by Richard Crews
Everyone in Washington seems to know two things:

(1) It would be catastrophic if the debt ceiling were not raised and the U.S. defaulted on the money it owes (interest on the U.S. debt would rise, the stock market would crash, banks would fail, the whole economy would come crashing down, the unemployment rate would sore, etc.), and

(2) It's not going to happen--it just "looks" like it might happen.

So what's going on?

Truly, Kabuki Theater at its finest.

The Democrats' game: The president can, under the Constitution, unilaterally raise the debt ceiling; in fact, he has a responsibility, under his oath of office, to do so. In the past a president has never been called upon to use this authority. Many times in each recent president's administration the Congress has ceremoniously raised the debt ceiling; it's a John-Marshall move: as Chief Justice of the Supreme Court--which had close to zero power when he took up the position in 1801--Marshall repeatedly made major rulings asserting the power of the Court to decide something the way it was going to be done anyway. When he was done, the Supreme Court was seen as awesomely powerful. So, Congress has always ceremoniously raised the debt ceiling, hoping people would come to think that only Congress can do it.

So the Democrats' game is to "negotiate" hard and "compromise" self-sacrificingly with the Republicans about raising the debt ceiling (cutting government spending, raising revenue, balancing the budget, even trimming entitlements, and all that), in other words, calling the Republicans on their intransigent obstructionism, their willingness to paralyze the government to gain political points. And then the Democrats will get to say, "See, they wouldn't give an inch in favor of sensible, salvaging legislation. We just had to save the country anyway."

The Republicans game--having realized that "just say 'no' " is a winning political strategy--is to continue to "just say 'no' " hoping to run on, "See, we didn't give an inch on our principles, and they steamrolled us."

If the Republicans really negotiate on raising the debt ceiling, the Democrats will get to say, "See, they abandoned their principles." If they don't, the Democrats get to say, "See, they believe in politics more than good government--they're willing to stab the country in the back to gain political points."

The conclusion: The Democrats win it--checkmate in seven moves.