As legislative stalemates go, some are dumber than others. The one we have at the moment concerning the national debt limit is about as insane as they get. Any rational legislator would pick virtually any other decision point to put his or her stake in the ground on spending, taxes or any of the other dimensions of fiscal responsibility. The best time to do it, of course, is at the time a budget is poured, and it would be quite straightforward for Congress to use the current impasse to covenant that there will be no more continuing resolutions – and immediately raise the debt limit.
But to tell the world, as our Congress has for the past several months, that the bargaining chip of choice is that most elemental of governmental commitments – to pay its bills – is sheer stupidity. That is particularly true for our government, which must maintain confidence among foreign countries who hold several trillion dollars of our national debt and because of the enormous benefit which we derive from the dollar being the world’s major reserve currency. If we disturb that confidence such that we must pay several percentage points of additional interest, the added financial burden over the next ten years could dwarf any of the debt reduction proposals being discussed by either Republicans or Democrats.
Of course the reason so many smart people can collectively do such a dumb thing is that they do not have any collective responsibility for the outcome of their actions. Everyone involved seems to be rehearsing their blame game chant; something which would be of no use if the Public Check on Congress were in effect.