Playing Chicken With Madmen

The total amount of debt the federal government can incur is set by statute and only Congress can raise it.  This so-called "debt ceiling" is expected to be reached this spring and Republicans are threatening to vote against raising it despite the general consensus that this would have disastrous consequences for the U.S. economy and global markets.

The fact that this has become a 'serious' topic of discussion is remarkable. Even George Will thinks the Republican threat to oppose increasing the debt ceiling is nuts, calling it suicidal.  Well, the Republicans are either crazy or they have merely become adept at using a version of Nixon's Madman theory to get the Democrats to believe they will do anything -- even blow up the economy -- to get what they want.  Several Republicans have gone on record in opposition to raising the ceiling.  Sen. Lindsay Graham said that  failing to raise the debt ceiling “would be very bad for the position of the United States in the world at large,” but he still "wouldn’t vote to raise it “until a plan is in place" for the nation's long-term debt, particularly restructuring Social Security and cutting discretionary spending.

So, here we are again, with Republicans threatening to hold the government hostage until their demands are met.  At least this time the White House has begun to fight back, employing Austan Goolsbee, chairman of the Council of Economic Advisers, who hit the airwaves on Sunday to warn against "playing chicken" with raising the country's debt ceiling, saying it would cause "a worse financial economic crisis than anything we saw in 2008."  Goolsbee declared that “the debt ceiling is not something to toy with.”  He said that “[i]f we get to the point where you’ve damaged the full faith and credit of the United States, that would be the first default in history caused purely by insanity.”  This is a good start, but the Obama Administration will ultimately need to show that it can win this game of chicken -- that it has core principles and is just as determined to fight for them as the madmen are for theirs.