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The Debt Ceiling and Hostage-Taking

This item appeared as part of a column at Progressive Fix.

It's happened so quickly that its significance may have been obscured, but one of the biggest recent developments in Wingnut World has been the rapid devolution of conservative opinion on the pending debt limit crisis--from demands for hard-line negotiations to outright rejection of negotiations at all, often supplemented by claims that the government doesn't need new debt authority anyway.

This last phenomenon, which Jonathan Chait and others have been calling "debt-ceiling denialism," is spreading like kudzu since it was first notably articulated by Sen. Pat Toomey (R-PA) in a January column in the Wall Street Journal. There are different forms of the argument, but the common threads are the claim that the federal government can prioritize the use of revenues in a way that avoids debt default, and the complaint that the whole issue has been manufactured by Democrats to avoid big spending cuts. Toomey attracted 100 House members and 22 Senators to his "Full Faith and Credit Act" legislation that would supposedly avoid a default by forcing debt payments to the top of the spending priority list.

Short of explicit denial that a real breaching of the debt limit would be a bad thing, other conservatives (including presidential candidates Tim Pawlenty, Michele Bachmann and Herman Cain) take the parallel position of opposing any increase in the debt limit on grounds that spending (without, of course, any tax increases) should be cut enough to make the increase unnecessary.

The usual reaction in Washington to this sort of talk is to dismiss it as tactical positioning for the "deal" that will ultimately be cut--as "hostage-taking" aimed at maximizing the "ransom." Perhaps that's exactly what it was initially. But at some point, arguments that the hostage's life is worth nothing, or worse yet, that the ransom can be earned precisely by killing the hostage, undermine the very idea of a deal, particularly when refusing to negotiate with Democrats is a posture that conservatives value as an end in itself anyway. Indeed, the trend in conservative rhetoric on this subject is to accuse Democrats of hostage-taking by their adamant refusal to accept vast spending reductions. It's a dangerous gambit, made even more tempting to Republicans by the fact that debt limit increases are perpetually unpopular among the overwhelming percentage of Americans who have no real idea of the merits of either side of the dispute.

The key question is the extent to which the GOP's business elites forcefully push back and demand a more reasonable attitude before things get out of hand. That's particularly urgent since debt-limit deniers and hard-liners alike are getting into the habit of arguing that financial markets care more about spending reductions than any hypothetical default on the debt. Moreover, debt-limit ultras are also playing with fire by systematically eliminating any incentive for the Obama administration or congressional Democrats to make concessions to a credible negotiating partner. Why offer a ransom when the hostage-takers no longer seem to care what you offer? Better to just send in the SWAT team and take your chances.