President enters stage left, beaming loftily at the Chorus.
House Speaker enters right, arms crossed and scowling.
President silently opens his hands as if presenting a gift. Speaker shakes his head angrily.
President furrows his brow, points at his watch, and wags his finger. Speaker shakes his fist in the air and grimaces fiercely.
Chorus members cover open mouths in alarm and look nervously at their watches.
* * *
It makes for good theater, and the audience is enthralled. Will Democrats cave to Republican demands for stiff budgets cuts as a condition for raising the debt ceiling? Will Republicans compromise on taxes? Are they actually crazy enough to drive the United States into bankruptcy?
Given the breathless media coverage of the drama, you can be forgiven for thinking that you're witnessing a genuine conflict with serious economic consequences. In fact, what is you're watching is a charade--a dumb show, as it was called in Shakespeare's time.
The apparent plausibility of the drama rests on two conceits:
- The conflict is a deadly game of chicken. If the parties do not agree to raise the debt ceiling by August 2nd or thereabouts, the U.S. will suddenly default, sparking a severe economic crisis.
- The Republicans might be crazy enough to do it.
Let's start with 1). Economic crises are caused by perceptions. If investors come to believe that the U.S. cannot or will not make its debt payments, a severe crisis would ensue.
But unlike the game of chicken in which death comes instantaneously, investor confidence won’t evaporate in an instant. Instead, anxiety will slowly rise as the Treasury runs low on accounting tricks to extend payment deadlines. That anxiety will have real, though limited effects--reduction of the government's bond rating, decline in the value of the dollar, and turmoil in the markets.
In other words, instead of a sudden crash, there will be a gradual intensification of economic discomfort. Who will feel this discomfort most immediately and acutely? The bankers, investors, and businesspeople that politicians--especially Republican politicians--rely on for campaign capital.
Which brings us to 2). The Republicans do sometimes seem awfully crazy in these days of Tea Party mania, and there are certainly some Republican legislators crazy or stupid enough to drive the U.S. into default, consequences be damned.
But being politicians, the primary objective of most Republican legislators is to get reelected. Political analysts do not tend to regard ruining the fortunes of campaign donors as an effective re-election strategy.
In short, when investors and business people start losing money because of the debt ceiling charade, they will urgently call their Republican representatives. When that happens, some of those representatives will capitulate. It will only take about 25 to join the Democrats in raising the debt ceiling. Most likely, the Republican leadership will cut a face-saving deal before it reaches that point.
And so, sooner or later, the two parties will agree on symbolic but inconsequential budget actions, and Congress will once again vote to increase the debt ceiling, as it has done 74 times since 1962.
The party leaders surely realize how it will play out. They could easily wrap up negotiations tomorrow.
But that would deprive the actors of their stage time. House Speaker John Boehner has to perfect his pantomime of ideological pugnacity in order to seduce angry Tea Party voters. President Obama must develop his portrayal of a serious post-partisan statesman in order to attract independent voters. The media chorus needs high drama in order to sell tickets.
And so, the show must go on. Pass the popcorn.
Michael Wolraich (@wolraich) is the author of Blowing Smoke: Why the Right Keeps Serving Up Whack-Job Fantasies about the Plot to Euthanize Grandma, Outlaw Christmas, and Turn Junior into a Raging Homosexual.