Here's Why I Think Jack Lew Needs to be Painfully Honest About the Debt Ceiling
I've gotten a bunch of email and comments regarding my post earlier this morning that criticized Jack Lew's vagueness about how Treasury would deal with a debt ceiling breach. Instead of adding an update to the post, I want to create a whole new one to address them. I think it's important. Here's a sampling from the comment thread:
TLM: Of course they have a plan. But telegraphing that plan is a no-win exercise on multiple levels.
histprof1: Why would any functional person give the GOP anything to work with at this point?....I suspect that he has a plan and has his rationale ready. I also suspect that he will let the politics work until past the last minute before he goes legal. In fact, I suspect that his first executive action after the GOP fails to raise the limit will be aimed at making them try again. After that, he goes into emergency powers territory and the checks and balances fun begins.
Jasper_in_Boston: What's so hard to understand, Kevin? Default would quite possibly be catastrophic, and Lew (and Obama) quite understandably don't want to give the forces of nihilism any reason to think we can get through it easily.
gyrfalcon: Bingo, bingo, bingo. The GOPers have already glommed onto the idea that we can pay off bonds from incoming revenues, and many of them are positively gleeful at the idea of having the government stiff everybody else, including SS and veterans' benefits, thinking it will look to the public like Obama's doing....It flat-out isn't possible to discuss this honestly with this pack of denialists and nihilists. The admin's only possible strategy is to keep it as vague as possible.
This is the conventional wisdom, and believe me: I get it. But I think it's dead wrong. The assumption here is that (a) the alarm level needs to be kept at maximum, and (b) no one will ever find out if Lew was being truthful because the debt ceiling will eventually get raised.
Maybe. But that's a pretty dangerous assumption at this point. And if we do breach the debt ceiling, and it turns out that prioritization was in the pipeline all along, and Social Security checks were never in danger, and Treasury can in fact choose which bills to pay—in other words, if the alarms turn out to have been overblown—then there's going to be hell to pay. Republicans will be more convinced than ever that they can't trust anything Lew or Obama says, and they'll become even more instransigent about the debt ceiling. In other words, genuine disaster becomes even more likely.
Like it or not, my view is that Lew needs to be rigorously, meticulously honest. He absolutely can't afford to say anything that might turn out not to be true, or that might eventually be seen as politicization or game playing. That includes making vague statements that later turn out to be deceptive because, in fact, plans were in place and he knew it.
Is it possible that being truthful will persuade some of the nutballs that the debt ceiling isn't actually a big deal? Sure. But they already think that. So who cares? The real audience for Lew's testimony is the folks who are conservative but not crazy. They're on the edge already, but if they start to get an inkling that Lew is scaremongering in even the smallest way, they could turn against him.
I understand the arguments about how dangerous it is to run the risk of making a debt ceiling breach seem manageable. But I think it's a lot more dangerous to be caught making even modestly deceptive statements "for the greater good." My earlier post wasn't written just because I'm personally curious about what Treasury's plans are. It was written because I think Lew is playing with fire.
UPDATE: Just as I finish writing that a debt ceiling increase is a "dangerous assumption," we start getting reports from Capitol Hill that Republicans are getting ready to pass a short-term debt ceiling increase. Only for a few weeks, though. Stay tuned.