Why This Debt-Ceiling Fight Is Different by Jeffrey Frankel
As Washington gears up for yet another political showdown over raising the federal debt limit, congressional Republicans are clearly hellbent on letting the US government default on its obligations. Unfortunately, allowing the GOP to drive the US economy off a cliff may be President Joe Biden’s best option right now.
CAMBRIDGE – The United States has reached its statutory debt limit of $31.4 trillion. As Washington gears up for yet another partisan showdown over whether to raise the debt ceiling, with congressional Republicans seeking concessions from Democrats in exchange for their votes, many are understandably nonchalant about it. Americans feel they have seen this movie before, and the story usually ends with the bickering politicians reaching a last-minute compromise. So, no need to ring the alarm bells.
But this reboot could have a different, tragic ending. In the 1955 movie Rebel Without a Cause, James Dean’s character survives a deadly game of “chicken” by jumping out of his car at the last moment while his rival miscalculates and drives off a California cliff. With the US economy barreling toward the cliff’s edge, it is clear that intransigent Republicans have no intention of hitting the brakes. This could mean a once-unthinkable US government default.
Unfortunately, letting Republicans drive the US economy off a cliff may be President Joe Biden’s best option right now. But the US still has at least five months to jump out of the car. Treasury Secretary Janet Yellen said last week that she will pursue a set of “extraordinary measures” (all of which have become rather ordinary in recent decades) to postpone America’s day of reckoning until early June.
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