Beware the Defaults of March

If only we knew if miscalculations by both Obama and Republicans will lead to catastrophe on the debt ceiling.

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2014 and 2016. At what point do 2014 and 2016 political considerations become a serious factor in the fiscal equations? House Republicans are predominately from safe districts, meaning that their biggest existential threats are primary challenges. How many who voted for the fiscal cliff tax deal will be willing to cast another primary bait-type vote in a couple of months if the fiscal cliff deal isn't the total victory conservatives crave (which it certainly will not be)? Will House Budget Committee Chairman Paul Ryan, who voted for the deal, risk his 2016 presidential prospects with a second albatross vote? On the Senate side, GOP leader Mitch McConnell, the deal's mastermind, is up for re-election next year. Were I running the Club for Growth, which opposed the deal, I would spend the next few weeks beating the Kentucky bushes for a stalking horse to keep McConnell in line.

[See a collection of political cartoons on Congress.]

Who's crazy? Hardly anybody believes Obama will actually refuse to negotiate over the debt ceiling, though some of his supporters wish he would, consequences be damned. Jared Bernstein, a former Obama administration economic adviser who asked in a blog post last week "how did Congress become the biggest threat to the economy and what can be done about it?" argued for Obama unilaterally ignoring the debt ceiling in the name of his constitutional obligation to maintain the nation's creditworthiness. The Washington Post's Ezra Klein wrote last week that Republicans aren't as fiscally crazy as they want to seem, that they won't really force a default. Maybe he's right. Both sides in this fight think they know the other's pressure points—and the economic effects of a crisis—well enough to avoid real damage.

Are they right? Or will miscalculations—Republicans misjudging Obama's resolve, say, while he underestimates their willingness to default—lead to catastrophe? Ah, if only one knew.

  • Read the U.S. News Debate: Who Won the Fiscal Cliff Showdown?
  • Read Ryan Alexander: 4 Common Sense Ways Congress Should Deal With Our Finances
  • Read Jamie Stiehm: Republican Intransigence Will Plague Obama's Second Term