Boehner After GOP Hostage Taking: This is about doing the right thing for our country

It’s entirely possible that the House Speaker really is this dumb. With this in mind, I’m trying to think about how to ask the questions in a way John Boehner can understand. How about this:

1. How would the country benefit from two votes on raising the debt ceiling, instead of one?

2. If Republicans are sincerely concerned about economic “uncertainty,” why tell investors, job creators, and international markets that default is a possibility early next year?

3. If getting one debt-ceiling revision through Congress is necessary but difficult, why make lawmakers go through this twice?

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But the consequences of any default would, ironically, actually increase the size of the government relative to the U.S. economy—the very outcome that Republican intransigents claim to be trying to avoid.

The reason is simple: A government default would destroy the credit system as we know it. The fundamental benchmark interest rates in modern financial markets are the so-called risk-free rates on government bonds. Removing this pillar of the system—or creating a high degree of risk around U.S. Treasurys—would disrupt many private contracts and all kinds of transactions. In addition, many people and firms hold their rainy day money in the form of U.S. Treasurys. The money-market funds that are perceived to be the safest, for example, are those that hold only U.S. government debt. If the U.S. government defaults, all of them will "break the buck," meaning they will be unable to maintain the principal value of the money that has been placed with them.

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BDBoop said:

Government default: What would it look like? - By Simon Johnson - Slate Magazine

"Dear tea party, here is what you do not seem to understand. Prioritizing bills means nothing if global markets crash. Got it? Good." Signed Karoli, Crooks & Liars

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