Friday, January 18, 2013

Final word (I hope) on the debt ceiling crisis

Perhaps I am tempting fate by jumping the gun here, but increasingly the evidence is mounting of Republican climb-down from their threat of nuking the U.S. and world economies unless the Obama Administration does their bidding instead of that of a majority of U.S. voters.

This appears to make it very clear, at least ex post, that the Administration made the right political call by rejecting the constitutional and platinum coin options that a range of commentators, including me, were urging it to consider.  Had the Administration said that it would invoke one of those options to avoid default, it seems in retrospect highly likely that the Republicans would not have backed off.  Blowing past the debt ceiling would then have been a device to attack Obama for tyranny or illegality or whatever, while being largely shielded from the consequences of default.  (There would still have been some significant economic consequences, but the question of public blame might have been more ambiguous.)

The apparently positive playout from the Obama Administration's political strategy does not, of course, undermine the legal arguments that were being made in favor of those courses of action.  And the proponents of the various workarounds may also conceivably have strengthened the Administration's position, such as by permitting it to make a powerful statement through disavowal.  In other words, arguably we played a useful role in the broader drama, even if we didn't think that was what we were doing.

Obviously, one could ask how certain ex ante the favorable outcome that we appear to be witnessing ex post actually was.  In addition, we are not quite through to the other side yet - I will certainly feel silly about this post if we end up facing a debt catastrophe after all.

But suppose the debt crisis does indeed evaporate.  For my part, rather than gnashing my teeth over the possibility that the Obama Administration's political judgment may have been better than mine on this matter, I am actually quite relieved.  Sitting where I am, sussing out political strategies is just a parlor game.  Even just from an intellectual standpoint, it's tangential to the issues on which I would actually want to claim expertise.  But what those guys do actually matters.

During Obama's first term, I was frequently distressed to see the Administration making what I considered silly and naive tactical and strategic misjudgments.  I would then later conclude that my misgivings had indeed been borne out by events.  It certainly feels much better, this time around, to get the idea that they actually know what they are doing.

1 comment:

Lilia Costales said...

We can only hope that the next moves that the administration will make will be the right ones, since there is only so much a debt ceiling can go. Favorable conditions could help dissipate the debt crisis, if it does happen.

Lilia Costales