Saturday, July 16, 2011

even a bullshit political theater solution could cause real harm

this is what i don't understand about the so-called mcconnell proposal: as i understand it, the proposal would resolve the current debt limit increase standoff by allowing the president to raise the debt ceiling initially but then setting up congress to have a series of additional debt ceiling standoffs between now and the 2012 election.

the big concern about the debt ceiling is that the current standoff is trashing the u.s.'s AAA bond rating. that rating will definitely be trashed if the country defaults, but the damage could be done before a technical default happens just by virtue of the uncertainty created by the standoff. so doesn't setting up a series of future standoffs really just make the uncertainty the u.s.'s credit worthiness even worse? sure, under the mcconnell plan the debt ceiling will probably go up each time, but just the repeated possibility that it won't would inevitably damage the country's credit worthiness, right? am i missing something?