Senator Chuck Schumer insists that it would be the height of irresponsibility either to freeze the federal government’s debt ceiling or “shut down the government.” Either action would risk “the credit markets losing some confidence in the United States Treasury” — tantamount to “Playing with fire.”
The opposite of his point appears closer to the truth. Michael Tanner explains that “If the debt ceiling is not increased, the Treasury can prioritize interest and debt payment to avoid a default and essentially put the government on a stringent pay-as-you-go basis.” Economist Robert Murphy adds that “even if the debt ceiling weren’t increased, the Treasury could still roll over its debt as existing bonds matured. The only thing the Treasury couldn’t do would be to issue more debt.”
The truth behind Schumer’s clichéd metaphor is this: He and his cronies have been “playing with fire” for a long time. And it’s worth noting that forcing the Treasury to switch to pay-as-you-go would likely have the opposite effect on credit markets than he contends: When prodigal spenders cut up their credit cards and continue to pay existing bills, creditors tend to breathe a little easier.
But expect no such acumen from Schumer, who, in that same exhortation, lists the “three branches of government”: The House, the Senate, and the president. Apparently, he hopes to gain authority for his contentions by piling factual error upon cliché.
This is Common Sense. I’m Paul Jacob.