If you thought the financial crisis was bad, wait till the debt ceiling caves in

By Ezra Klein,
WashPost
Monday, April 18, 9:59 PM

Timothy Geithner does not want the market to smell his fear. “I want to make one thing perfectly clear,” he said Sunday. “Congress will raise the debt ceiling.” But if there was truly so little doubt, Geithner wouldn’t have been peppered with questions about it on the Sunday shows.

Raising the debt ceiling may be economically necessary, but it’s politically lethal. Only 16 percent of Americans want the debt ceiling raised, according to an NBC/Wall Street Journal poll. Sen. Marco Rubio said he wouldn’t vote for an increase unless it included “a plan for fundamental tax reform, an overhaul of our regulatory structure, a cut to discretionary spending, a balanced-budget amendment, and reforms to save Social Security, Medicare and Medicaid” — everything on the conservative agenda, basically.

And this is where things get dangerous. Republicans and Democrats both bear substantial blame for the country’s rising deficits. The Bush tax cuts and the Medicare Prescription Drug Benefit and our various wars — none of which have been paid for, and all of which are ongoing — are major contributors to our mounting debt, and all were passed by Republican majorities. The debt ceiling had to be raised seven times during the Bush years, and the policies that helped drive those increases — not to mention the financial crisis that followed them — have not been undone under Obama.

But the GOP wants to pin the debt on the Democrats, and it wants major concessions in return for its vote. Democrats, however, aren’t going to agree to the GOP’s plan to deny partial responsibility for the country’s debt and hold the country’s credit rating hostage in order to reshape the government along more conservative lines. Fear over exactly this sort of political gridlock is what led Standard & Poor’s to downgrade the nation’s credit outlook to “negative” Monday.

(More here.)

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