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Monday, September 30, 2013

Paul Krugman: Rebels Without a Clue

 It's irrepsonsible for the GOP to take this kind of risk with the economy:

Rebels Without a Clue, by Paul Krugman, Commentary, NY Times: This may be the way the world ends — not with a bang but with a temper tantrum.
O.K., a temporary government shutdown ... wouldn’t be the end of the world. But a U.S. government default, which will happen unless Congress raises the debt ceiling soon, might cause financial catastrophe. Unfortunately, many Republicans either don’t understand this or don’t care. ...
Today we have a weak economy, with falling government spending one main cause of that weakness. A shutdown would amount to a further economic hit...
Still, a government shutdown looks benign compared with the possibility that Congress might refuse to raise the debt ceiling.
First of all, hitting the ceiling would force a huge, immediate spending cut, almost surely pushing America back into recession. Beyond that, failure to raise the ceiling would mean missed payments on existing U.S. government debt. And that might have terrifying consequences. ...
No sane political system would run this kind of risk. But we don’t have a sane political system; we have a system in which a substantial number of Republicans believe that they can force President Obama to cancel health reform by threatening a government shutdown, a debt default, or both, and in which Republican leaders who know better are afraid to level with the party’s delusional wing. ...
Meanwhile,... reasonable people know that Mr. Obama can’t and won’t let himself be blackmailed in this way... After all, once he starts making concessions to people who threaten to blow up the world economy unless they get what they want, he might as well tear up the Constitution. But Republican radicals — and even some leaders — still insist that Mr. Obama will cave in to their demands.
So how does this end? ... Ironically, considering who got us into our economic mess, the most plausible answer is that Wall Street will come to the rescue — that the big money will tell Republican leaders that they have to put an end to the nonsense.
But what if even the plutocrats lack the power to rein in the radicals? In that case, Mr. Obama will either let default happen or find some way of defying the blackmailers, trading a financial crisis for a constitutional crisis.
This all sounds crazy, because it is. But the craziness, ultimately, resides not in the situation but in the minds of our politicians and the people who vote for them. Default is not in our stars, but in ourselves.

    Posted by on Monday, September 30, 2013 at 12:24 AM in Economics, Politics | Permalink  Comments (77)

          


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