Megan McArdle of The Atlantic has a pretty amusing post up about people who contend that if we don’t raise the debt ceiling, we’ll still have “plenty of money for debt service, military payrolls, Social Security, Medicare, and Medicaid.” While this is technically true, McArdle compiles a hilarious list of things we won’t have money for, starting with….
You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
Oops! Can’t fire those guys. This part I take personally, though:
The market for guaranteed student loans plunges into chaos. Hope your kid wasn’t going to college this year!
I’d actually favor strong college loan reform — or at the very least, putting in place some mechanism that wouldn’t let tuition prices rise twice as fast as inflation (or, in the case of law school, eight times as fast). But this sudden erasure of the Department of Education would essentially cause almost all universities to cancel fall term. Not only would I have to move out of graduate student housing and find a new apartment, but the cascade would probably be enough, by itself, to paralyze the knowledge economy — i.e., the economy. Tuition in the profitable parts of the university — the professional schools, the undergraduate college — pays for a huge amount of the research and development done in this country. Do we really want to fire the professors and graduate students and postdocs who do all the basic research in this country? Because that’s what will happen if the education funding system evaporates overnight.
We could certainly do less, and I agree that we should. But we cannot do it instantly. It is not politically possible, and it is not even fiscally possible. It would, for example, be eminently possible to have a private air-traffic control system. But we cannot privatize the system by August 3rd. Similarly, I think we could use a Singapore or Chilean style private accounts system to save for retirement, but we cannot arrange for today’s Baby Boomers to have started saving in 1972….
Of course, when it comes down to it, Republicans will vote to raise the debt ceiling — at least the non-stupid ones. Nobody wants to destroy our university system, or let all the federal prisoners out, or stop looking after our nuclear weapons. And because congressmen and senators represent districts and states full of real people trying to claw their way out of recession, they don’t really want the massive furlough of federal and state workers that this kind of austerity would involve. They pretend not to be Keynesians, but who wants to go back to their district and explain why everybody’s jobs just went away and the housing market is in turmoil?
The reality is that the argument over the debt ceiling is a kind of stylized theater. (If only there were a word for that.) The Republicans are posturing, hoping to scare the Democrats into giving up certain concessions. It’s Nixon’s “madman” approach, except President Obama and his advisers seem to be a good deal more credulous than the North Vietnamese. There will be a deal, and everyone will act like the adults in the party kept the rabble-rousers from driving the country over a cliff, but they had to throw them a little red meat in the process. In fact, of course, the rabble-rousers are a key part of the adults’ strategy against President Obama and the congressional Democrats.