On the hustings nothing is too extravagant. American’s inclination to invest, to trust the oldest mass democracy in the world and sleep at night can survive a stupefying array of apocalyptic innuendos: a “one nation” bus tour by Sarah Palin, a “red menace” by Mitch Daniels and the claim that were within inches of losing the free market economy by George Romney.
Only one, authored in Washington, has earned a soothing caveat or two: the “debt ceiling crisis” that is the unwillingness of Congress to allow the American government to borrow any more money, even to pay the interest on what the government already owes.
The US and the global economy are approaching a home-grown, flag wielding, white collar terrorist attack on the credit worthiness of the US. The blackmailers—Representative Boehner and Senator McConnell—are pretty confident they’ve got the President’s attention. Indeed, they report that their talks with his negotiators have been “productive.” Nevertheless, nothing tangible has been done to avert a financial explosion in the first week of August. So, gestures are made to keep up Wall Street’s animal spirits.
The Republicans, according to the Chamber of Commerce, have let business in on their threat to not raise the debt ceiling: “It’s political theatre; you just keep worrying about Obama and his intention to raise your taxes on your fabulous incomes in 2013.” In other words, Obama will either cave in time or his officials will manage a “technical bankruptcy” for a little while—and, then he’ll cave.
Let’s set aside the spectacle of elected politicians meeting behind closed doors carving up $multibillion statutory programs and colluding to mitigate their individual political risks by agreeing to cover each other’s backs. Let’s experiment; let’s take the threat of a “technical bankruptcy” seriously for a moment.
Starting in August, the US government will have to find some $20 billion each month just to pay the interest on its loans which currently are at very low lending rates. Obviously, the Republican leadership wouldn’t approve an emergency surtax to raise the money. No one is suggesting the government pay the Chinese before it pays pensioners and veterans. The immediate layoff of public servants costs money, rather than saves money immediately.
Obama, however, has one option that could buy real time: he could sell assets.
This would probably require emergency legislation because most public assets of significant value are now instruments of legislatively defined public goals. Is Congress ready to privatize the Tennessee Valley Authority’s electricity system or parklands in Alaska and the West? Would they agree to sell to Ontario, Canada the right to tax power generators for the use of the water on America’s half of Niagara Falls?
Obviously, the biggest play could be with the biggest player: China. Maybe, China would be willing to spend half a $trillion to avoid a hugely expensive naval power arms race by buying the US 6th fleet.
If any of this sounds fanciful, bear in mind: in threatening to push the US government into bankruptcy the Republican leadership is asking Americans to pretend that America is on its last legs.
Churchillian rhetoric in the service of Churchillian sacrifice, without a Hitler in sight.