The Debt Debate: What About Honor?

Republican politicians can rage all they want, but raising the debt ceiling is a very conservative idea.

Michele Bachmann, the Republican congresswoman from Minnesota and Presidential candidate, makes a great point of having raised five children and 23 foster children. And, judging from afar, I bet she’s a helluva good mother, politics aside. But I can’t help wondering: What does Michele Bachmann teach all those kids about the importance of living up to your obligations?

Say, for example, that one of them owed some people, oh, about $14.3 trillion dollars. Would Bachmann tell her children that a debt is a moral obligation that an honorable person will go to great lengths to pay if at all possible? Or would she tell them, Well, it all depends. Whether you pay back money that’s been loaned to you is a practical question. And if you calculate that you’d be better off reneging, then by all means do so. It’s perfectly O.K.

Does Bachmann teach her kids that it doesn’t matter why you owe the money or what you spent it on—that if you owe it, you have a duty to repay it? Or does she tell them that your obligation to repay depends on whether—in your own opinion—you spent the money wisely or wasted it? Does she say it’s a matter of principle, or does she say it’s a matter of what you can get away with?

In the Great Budget Debate of Summer 2011, in which both parties have held hostage a necessary increase in the legal debt ceiling while waiting for the other one to blink, what’s missing is any sense that the honor of the U.S. is at stake.

They don’t call it “honoring your debts” for nothing. We’ve had a cold-blooded public discussion of the pros and cons of putting yourself in a position where you can’t pay your debts. But the pros are irrelevant and only one con matters: We owe the money, and we’ve got to pay it back. Honorable people pay what they owe. True, sensible people don’t run up debts they can’t pay—but two wrongs don’t … etc.

At its root this is a very conservative, old-fashioned idea: A debt is a moral obligation. Yet it is conservatives, and congressional Republicans in particular, who have taken up the war cry of “Forget Aug. 2.” That, of course, is the day we hit the debt limit. After that, it will be illegal for the U.S. to borrow more money—unless the limit is raised.

There’s nothing extraordinary about doing so. For decades, raising the debt limit has been a regular Washington ritual, in which politicians deplore deficit spending, and party leaders issue a few “Get Out of Jail Free” cards to members facing tough reelection races, allowing them to vote against lifting the ceiling. Then everybody else votes to increase the limit, saying, “This better be the last time.” Democrats and Republicans both play this game. But this time, Republicans are making the argument that a failure to raise the ceiling wouldn’t be so terrible.

Some Republicans even say they don’t care about making a deal with Democrats that would include unprecedented spending cuts; they’re against raising the debt limit, period. Bachmann says, “Don’t let them scare you by telling you that the country’s going to fall apart” if the Aug. 2 deadline passes with no action. Former Minnesota Governor Tim Pawlenty says, “I hope and pray and believe they should not raise the debt ceiling.” You read that right: A man running to be President of the U.S. prays that the American government will wreck a 235-year record of honoring its obligations.

Nobody knows for sure what will happen if Aug. 2 arrives with no deal made. But there’s good reason to expect the worst. The U.S. has fallen into the classic debtor’s trap of borrowing to pay the interest on previous borrowing. This means that even if we shut the government down completely, bills would still be coming in and interest payments would still be coming due, and we’d be unable to pay them.

Oh, don’t worry, say the skeptics. Timothy Geithner’s a bright boy: Our Treasury Secretary can just juggle the bills, like a householder at the dining room table, paying the essential ones (such as interest on the debt) and postponing the ones where there is some room for maneuver.

Actually, the government is different from that householder. It can pay its bills if it wants to. The debt ceiling, after all, is entirely self-imposed. Congress could vote at any time not just to raise the limit but to abolish it, and no one can doubt that Obama would sign such a law in a nanosecond. The U.S. would have to borrow more money, to be sure. But better a debtor than a deadbeat. A decision to let the deadline pass rather than raise the limit is tantamount to a unilateral decision to stop paying somebody what we owe.

It’s an odd way to show fiscal discipline. It’s as if you went to the bank where you are behind in your mortgage payments and said, “Look, I’m sorry, but I’ve just been borrowing too much and wasting it on stupid, needless purchases. So as of now, I’m going to stop paying what I owe. Aren’t I wonderful for getting my appetites under control at last?”

Unfortunately, in the game of chicken between House Republicans and the White House, the Republicans don’t need to persuade the other side that they are correct in predicting that a failure to raise the debt limit would be no big deal. They only need to convince their opponents that they themselves believe that it would be no big deal. That is a much easier job. In fact, I believe that they believe it. This is scary, because people who believe that a debt freeze would be no big deal are more willing to risk such a freeze in order to get their way. Being, or pretending to be, out of your mind is a proven strategy for winning a game of chicken. That gives Representative Eric Cantor (R-Va.), the House majority leader, a big advantage when he negotiates with the President.

Like the proposed Balanced Budget Amendment, the legal debt ceiling is more a substitute for action than it is action itself. In all their years of griping about government spending, Republicans have never offered even a theoretical balanced budget. That includes House Budget Committee Chairman Paul Ryan’s (R-Wis.) famous “road-map” budget, which shows a deficit every year until 2062. Even his budget won’t fit under the debt ceiling.

Both sides, in essence, concede that the U.S. faces deficits as far as the eye can see, whether or not the debt ceiling is raised by Aug. 2. So does the great debate we’re having matter at all? The answer is yes, because how the U.S. deals with its debt burden is a reflection of its honor. Honorable people pay their debts, and honorable nations should do the same. Sometimes people absolutely can’t pay. Or they were tricked or misled so badly that they deserve a little restructuring of their debts. But when that happens, it is a stain on their honor that usually makes them unhappy. Certainly they are not a good role model for the government.

A better role model for Washington might be the millions of American homeowners—one out of four—who are under water. Their houses are worth less than what they still owe on their mortgages. Most of them are not bankrupt, and not trying to sell or move. They are paying their mortgages every month and just hoping that things will improve. What suckers! If the nation isn’t going to pay its debts, why on earth should its citizens?

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