Paul Krugman gets a call from the White House after they rejected the trillion dollar coin idea to stave off default on the nation’s bonds:
“The White House insists that it is absolutely, positively not going to cave or indeed even negotiate over the debt ceiling — that it rejected the coin option as a gesture of strength, as a way to put the onus for avoiding default entirely on the GOP.”
Wall Street Journal: “The White House also has rejected another escape clause: invoking the Fourteenth Amendment to the Constitution and borrowing more even if Congress hasn’t acted.
An unnamed Democratic Senate aide told Business Insider’s Joe Weisenthal, “It’s certainly a strange negotiating strategy to go out of your way to decrease your leverage by taking options off the table.”
I’m taking “strange” to mean “bad,” because it sure looks stupid. The White House has released a statement that partly explains their reasoning:
“There are only two options to deal with the debt limit: Congress can pay its bills or they can fail to act and put the nation into default,” said Press Secretary Jay Carney. “When Congressional Republicans played politics with this issue last time putting us at the edge of default, it was a blow to our economic recovery, causing our nation to be downgraded. The President and the American people won’t tolerate Congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy. Congress needs to do its job.”
Yes, the last time Republicans held the debt limit hostage it blew up in their face. Maybe they’re spooked by that — but maybe they’re not. It’s pointless to gamble when you’ve got a sure thing. I have no idea why they’re throwing every bargaining chip they have away and depending on the Republicans to behave rationally.
It makes no damned sense at all.
