Who is going to win this debt ceiling game of chicken?
Answer: not you.
To understand this game of chicken, follow the money: both Dems and Repugs have primary loyalty to THEMSELVES and their pocketbooks. And that means not pissing off the ignorant masses or their wealthy benefactors.
We make 80 million checks a month to Americans, 55 million people on Social Security benefits and millions more Americans of veteran's benefits, Medicare/Medicaid, people who supply our troops in combat. The longer we go into July, the more risk there will be in financial markets, more concern there is that America cannot get its act together to figure out how to solve this problem. This will be reflected in higher interest rates. Seniors who depend upon higher interest rates in their moneymarket funds will be happy to see T-bill rates balloon. There will be enough to pay interest on the debt, Social Security, Medicare and Medicaid and unemployment benefits. But there would be no money left for active duty military and federal workers.
If either the Repugs or the Dems think there's a winner in this game of chicken, better think again. The negotiations are not truly a zero-sum game. Rather, all incumbents would be worse off if a debt default prompted another economic crisis. One poll suggests that Republicans would incur somewhat more blame than Mr. Obama in the event of a failure to raise the debt ceiling. The difference is modest — 42 percent would blame the Republicans against 33 percent blaming Mr. Obama (with 13 percent suggesting that they’d blame both sides).
The politics of self preservation: In the event that a default is imminent as Boehner can't get a vote on a Repug deficit plan, the White House will employ a “nuclear option” to avoid one, which would be to cite constitutional provisions suggesting that the U.S. was obligated to pay its bondholders and instruct the Treasury to do so.
Of course Republicans would outwardly be outraged by the move -maybe threaten impeachment- but it would be a much different outrage than the one in which the economy goes into another severe recession. None of this is to suggest that Mr. Obama would be a “winner” in the eventuality of a failure to raise the debt ceiling. But the Republican incumbents in Congress might not be winners either. At the very least, there is significant uncertainty about what might ensue, enough so that the devil-on-your-shoulder temptation to undermine the economy by way of a default is a tenuous political proposition, regardless of the moral reservations that Republicans might have about it. (and forget about the Scalia mob interfering; they take orders from Corporations United)
Which leaves the last chicken in the room: the Repugs vote to raise the debt limit.
Yes, it would very unpopular with the Tea Bag crowd, but failing to do so because of the economic consequences that a default would trigger would be hazardous to their political life and the wealth of their Wall Street benefactors.
The bottom line is the bottom line: money talks and the Tea Party BS walks.
Say goodnight, Grover.
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