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Yes, Mr. Goolsbee, They Are That Insane, and They Know You’re Not

I suppose it’s positive to see Austan Goolsbee in pugilist mode against those who want to use the debt ceiling as a leverage point, but I still think he’s not quite getting the Republican strategy:

“This is not…this is not a game. You know, the debt ceiling is not…is not something to toy with. That’s the…the…if we hit the debt ceiling, that’s the…essentially defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic. I mean, that would be a worse financial economic crisis than anything we saw in 2008.

“As I say, that’s not a game. I don’t see why anybody’s talking about playing chicken with the…with the debt ceiling.

“If…if we get to the point where you’ve damaged the full faith and credit of the United States, that would…that would be the first default in history caused purely by insanity.”

Um, the Republicans are talking about playing chicken with the debt ceiling because they know that the Administration won’t. They’re counting on exactly the take that Goolsbee’s making. They’re counting on the not-in-anger-but-in-sadness take. That’s because they fully expect the President to give in to whatever demands they make to protect the full faith and credit of the nation.

Just listen to Lindsey Graham, appearing on Sunday’s Meet the Press. . . . [cont’d.]:

MR. GREGORY: You talk about the budget, you talk about spending. How will you vote on the debt ceiling? Will you vote to raise it? Which is, which is a vote that’ll come up in relatively short order.

SEN. GRAHAM: Right. Well, to not raise the debt ceiling could be a default of the United States’ bond and Treasury obligations. That would be very bad for, for the position of the United States in the world at large. But this is an opportunity to make sure the government is changing its spending ways. I will not vote for the debt ceiling increase until I see a plan in place that will deal with our long-term debt obligations, starting with Social Security, a real bipartisan effort to make sure that Social Security stays solvent, adjusting the age, looking at means tests for benefits. On the spending side, I’m not going to vote for debt ceiling increase unless we go back to 2008 spending levels, cutting discretionary spending.

MR. GREGORY: All right, but let me stop you for a second, Senator.

SEN. GRAHAM: I think it’s an opportunity…

MR. GREGORY: That’s a big condition…


MR. GREGORY: …just on Social Security alone.

SEN. GRAHAM: Yeah, it is.

MR. GREGORY: Do you think Republicans are prepared to follow you in two things you said: Raise the retirement age, and means test benefits for older Americans?

SEN. GRAHAM: I would suggest that if we’re serious about taking America in a new direction, and you’re not putting entitlement reform on the table, you’ve missed a great opportunity to change the course of America’s future. And the last election was about change, Change that really will make us something other than Greece. I think Pat Toomey, Rand Paul, and other candidates who are new to the Congress have said during the campaign, “Everything’s on the table when it comes to making America fiscally sound.” Let’s see if we can find bipartisan reforms in Social Security before we raise the debt limit.

Graham’s considered one of the more adult Republicans (his reputation is undeserved). And here he is ranting about Greece, which couldn’t have less of a resemblance to the US, and demanding both spending and entitlement cuts before agreeing to raising the debt limit.

Yes, that’s pure insanity. But the Republicans are banking on the fact that the President is “not insane,” that is, that he’s not willing to play a game of brinksmanship when there’s a path to just agree to their demands. Even though the spending cuts described, and the Social Security changes, would be just as insane as defaulting on the debt.

So the Democrats and the White House are talking about insanity, while the Republicans are banking on the responsibility of their opponents. This is why there’s ample reason to fear a resolution that works strongly in favor of spending and entitlement cuts.

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David Dayen

David Dayen