While it’s honest, a remark by the U.S. Senate’s Republican leader is not good news: This year’s crisis about the debt ceiling for the U.S. government is the new normal.
“In the future, any president, this one or another one, when they request us to raise the debt ceiling, it will not be clean anymore,” said U.S. Sen. Mitch McConnell, of Kentucky. By “clean,” he means without major conditions attached to the bill by Congress, as the GOP forced through this year.
That remark to CNBC’s Larry Kudlow is a forecast for partisan warfare that puts at risk the credit rating of U.S. Treasury bonds. If not every year, then it probably will happen at least every couple of years.
Raising the debt ceiling is one of the unpleasant necessities of government. People on both sides of the aisle in Congress have cast symbolic votes against raising it, including a young senator named Barack Obama a few years ago. But generally the leadership of Congress and the presidents of the day have recognized the necessity of getting the task done when needed.
We leave aside the disreputable nature of forcing for political reasons a potential default on U.S. government obligations. But Ezra Klein of The Washington Post noted the level of uncertainty that this injects into the international markets, if there is a heightened risk that one day U.S. Treasury notes won’t pay off, even temporarily.
“If you were an investor, would you want to put your money in a country that regularly held bitter partisan brawls over whether you would be paid back?” Klein said. “Or would, say, German bonds begin looking like a comparatively better bet?”
Potential defaults are a serious problem, even if only potential. “This is not the way of great nations,” sputtered economist Jared Bernstein.
Heck, with the current folks in charge, Greek bonds might start looking solid.