Debt Ceiling: Paying Attention to the Politics

John Zogby's 6/15 column for Forbes magazine noted that his organization's most recent poll had found 52% opposed  to a debt-ceiling increase and 41% in favor.  He went on to observe:

45% of all voters would be more likely to support the [debt-ceiling] increase if major budget cuts are part of the deal. That includes slightly more than one-half of the voters who oppose raising the debt ceiling. So if Washington could satisfy them with cuts, we could have voter consensus on a deal.

But have the pollsters separated out the data by "Red" and "Blue" states, or better yet, by Congressional district? What does a Republican up for re-election in 2012 have to deliver along with the debt-ceiling hike in order for primary voters in his state or district to forgive a "Yea" vote? That is what each such Congressional Republican is and will be asking himself. Sarah Palin's comment with regard to increasing the debt ceiling was simply, "Hell, no!" and anecdotal evidence (a perusal of comments left on news websites) suggests that the profane pixy from Wasilla did not overstate the "Tea Party" position.

The set of likely Republican primary voters, in Congressional districts represented by a Republican, and/or in states with one or more Republican Senator, is a very special subset of the general population. But the perceived attitudes of this subset will be crucial in determining whether the necessary majorities for affirmative Congressional action to increase the existing cap on full-faith-and-credit borrowing can be mustered.

I suspect the package Tea Party voters would demand in order to approve the debt-ceiling hike is much bigger than the package Congressional leaders, of either and/or both parties, could deliver.

(How many bond traders have as yet even considered these Washington dynamics, much less given them the detailed scrutiny they demand? All indications are that Wall Street continues to assume, blithely, that the necessary ceiling increase, with or without some fiscal austerity bonus, wil be forthcoming in good time.)

Avoiding default, therefore, depends on (a.) selling the Tea Party masses on the need for a debt-ceiling increase, or (b.) persuading Congressional Republicans to do the statesmanlike and responsible, but possibly politically suicidal, thing and vote for a bill that does not include abolition of the Department of Education and the Federal Reserve.

Contempt for all experts, even a profound suspicion of the very notion of expertise, however, is one of the hallmarks of this "conservative" movement. Who will explain the dangers to one of their seething town-hall meetings with any hope of being listened to? Even if such a brave person emerged, he would face the constant rejoinder that failure to rein in the deficits must someday produce the increased borrowing costs and downward fiscal spiral that ceiling-hike advocates warn against. While this observation may be valid, there is a big difference between "someday" and two months from today.

But the Tea Party believes that even if there should be some consternation in the bond market come August, it will be able to set things right. Warnings of the risk of more dire consequences will have little effect, because it is easy for this cohort to dismiss the "speculative" predictions of "so-called experts." Besides, they can find experts of their own to tell them what they want to hear. It also doesn't help that the warnings sound very much like those sounded by Wall Street and the Bush Adminisration in the course of their first, unsuccessful effort to obain the TARP legislation.

On that occasion, it took a jolt from the stock market to prod Congress into action. On this issue, continued inaction will most certainly result in a jolt. The concern I have been expressing is that the shock, when at last it comes, could well be huge, wholly uncontrollable in its immediate sequellae, and epochally catastrophic in its ultimate consequences.

There remains the hope that Boehner, McConnell and today's crop of GOP groundlings will brave political ruin to do the responsible and statesmanlike thing.

'Nuff said.

It does not help that this gang has played "Chicken" with the Democrats before and won, coming out with jalopy unscathed and glorious. When you talk to them of the urgency and peril of the situation, they only calculate the greater certainty of their foes' capitulation, and begin devising another escalation of their own demands.