Tea Partiers and Debt Ceiling: the Silver Lining

Some Republicans, including presidential candidate Michele Bachmann, say we should not raise the debt ceiling. Most others (including me) disagree: they believe that Timmy Geithner is telling the truth when he says we’d face a disaster if we failed to raise the ceiling. However, even those of us who believe Geithner should not fail to see that there would be one good thing to come out of a failure to raise the ceiling: it would present us with a rare case in politics where a politician’s prediction can be proved totally wrong only days after the prediction is made. Either sharply higher interest rates and general chaos would prove the tea-partiers totally wrong, or a cool and calm August 3rd would prove the rest of us wrong. Usually in politics, predictions are made about events that are far enough in the future that a) factors could change so much by the time the event occurs that the politicians can make effective excuses and b) the politicians could be out of office and not care anymore by the time the future event occurs. In this precious case, there would be total accountability for incorrect predictions.

Of course, if the tea partiers were proved wrong, they would make excuses. I predict they’d blame the Democrats for creating a self-fulfilling prophesy by emphasizing the potential dire consequences of a failure before the fact (“the only reason interest rates rose is that the Democrats’ spent so much time fearmongering!”). Another possibility is that they’d blame the market participants themselves (i.e. buyers of U.S. Treasuries and other financial instruments) for reacting irrationally, but that would be a dumber strategy.

If I were proved wrong, I’d blame Geithner for lying. Still, though, my credibility would take a deserved hit.