By refusing to negotiate the debt ceiling, the President has drawn another red line. Once again, he is in a tenuous box of his own making.
Contrary to the myths presented by the President and his allies, consider the following:
First, the President can prevent default on our debt and the disruption in the flow of critical entitlement via legislation. He has refused to sign it.
Second, the debt ceiling has been referred to as the “nuclear” option, but it has nothing to do with the full faith and credit of the United States, which can be preserved regardless of the outcome of the fight. In impasse, the U.S. will still pay its bills, but its spending will be limited to the extent of tax revenues. The real fallout from a standoff would be the economic damage that would follow as a result of the dramatic reduction in government spending.
Third, the world’s economies rely upon the smooth functioning of the market for U.S. Treasuries including the $4 trillion “repo” market that uses Treasury securities as collateral and provides much liquidity to the U.S. financial system. If the ceiling is not lifted, rates will rise. But the Repo and other markets will function as they have in past crises......
.....Apparently, there will be no such dialogue for this administration. To emphasize the point, this president’s surrogates equate such discussions to negotiating with terrorists and arsonists.
Which leads to the President’s latest box: on one hand he and his surrogates forecast “economic collapse” should the ceiling not be raised. On the other hand, by cutting off discussion, he is signaling his resignation to such an outcome. But is it conceivable that he would willingly catalyze economic Armageddon over a debt ceiling impasse?
The answer must be no. Surely the President’s advisers are warning him.....
(Excerpt) Read more at spectator.org ...
