By Alex Biles, University of Michigan
After giving fellow co-founder Alex Schiff’s excellent take on the U.S. debt ceiling debacle some thought, I found myself in agreement with much of it. Considering our countless lunches with departures marked on an agreement to disagree, this was slightly unexpected.
I have a few comments of my own to offer on the topic:
First of all, I think Alex profoundly overestimates the influence of the Tea Party in the Congress. I don’t think growing unfavorability ratings lend this view much credence either. More importantly, opposition parties consistently demagogue the debt ceiling – occasionally to the point of hilarious hypocrisy, Mr. Obama. Also, lest we not forget the post-Contract with America hoopla over raising the debt ceiling back in 1995.
In contrast, I see the debacle as the fruit of a Republican-controlled House coupled with a Democratic presidency, and an extremely weak GOP field for 2012 to boot. With the very real prospect of another four years of Obama, the GOP is more than willing to utilize this sort of demagoguery to sway public opinion. It’s grand political theater, albeit at the expense of the American public and the global economy.
I am also curious regarding the fallout in the form of rising interest rates for Treasury bonds that would be triggered by a crisis or full-out default. With the credit downgrade of U.S. bonds looming regardless, how big would the difference in rates be if our government indeed defaulted on its debt? Additionally, I’m intrigued as to what long-term macroeconomic effects a jump in rates could have.
My final comment to add is a question to the White House: How the hell could you not have seen this coming months ago during the budget talks? Yes, those budget talks where your administration caved-in to the GOP demand of extending Bush-era tax rates for high earners. Where was the quid pro quo?
I’m honestly appalled by the utter incompetence on behalf of the Democrats that must have been going on during the time of negotiations. The Center for American Progress was literally screaming at the top of their lungs about this nearly a year ago, heads poking from their Toyota Prius windows.
Seriously though, where are these advisors’ pink slips?
Addendum: I’m not convinced that these debates are deeply rooted in ideology at all. Political jockeying for 2012, along with a handful of special interests seem to be driving the conversation at the table.
Alex Biles is a co-founder of The New Student Union