Saturday, January 19, 2013

Deflation

My dad used to tell a story about how one day as a very young boy he suffered some monumental slight at the hands of my grandmother. Concluding that this slight was one too many, he stomped his foot and yelled, "I'M RUNNING AWAY, AND I'M NOT COMING BACK!"

My grandmother's response was, "We'll miss you."

My dad sulked out of the house, made it around the corner, and sat on the curb. Utterly deflated, he was back home within half an hour.

House Republicans must be feeling similarly deflated.

After stomping their collective feet and threatening to bring down the U.S. economy through a debt default, Republicans have decided to approve a small expansion of the debt ceiling that will push the issue off for three months.


Republicans vow to spend the three months thinking of diabolical ways that the economy can really and credibly held hostage--next time. But their bluff has been called, and they aren't any more likely to carry through with their threats (however elaborately constructed) in March. They certainly won't be garnering any additional sympathy.

The whole childish spectacle might be funny if it weren't so damn costly and destructive. Technically, the U.S. passed the debt ceiling around the start of the year. The Treasury Department has been scrambling to shift money from one account to another to stave off default. Given the problems in the economy and government, that time and effort could have been spent in more productive endeavors. The government really has better things to do.

Worse, the threat of default introduces uncertainty into an economy that it is only weakly recovering and that faces substantial challenges. Like the debt ceiling, many of these challenges--sequestration, a possible government shut-down--are unnecessary and self-inflicted. Other challenges--weaning the economy off the stimulus, long-term debt problems, weak economies among our trading partners--are very real and frankly challenging enough.

And the threats haven't done our bond or stock markets any favors.

Maybe the begrudging decision to extend our ability to borrow (for things that Congress has already approved) is a small sign of maturity--or even better, the start of an effort to solve existing problems instead of creating new ones.

In the meantime, if you come across a sniffling, dejected House Republican, be kind enough to give him or her a tissue and a hug.

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