Who’s afraid of the Big Bad Default Wolf?
Just about everybody: Wall Street, the Federal Reserve, the big banks, major international creditors, huge multinational corporations, the U.S. Chamber of Commerce, our allies, foreign creditors, and virtually every economist on earth.
So who’s not afraid?
About 40 Tea Party Republicans in the U.S. House. According to them, even if we don’t raise the borrowing limit, tax revenues will easily cover debt payments, with some left over for the Pentagon. What’s the big whoop?
Where in the world did they get that idea? From Ayn Rand, from Aesop’s Fables, and from Democrats.
Like Aesop’s shepherd boy who cried wolf one too many times, the Democrats have cried “WOLF!” over and over—first on the “fiscal cliff,” then sequestration, then the government shutdown. The crises came and went, but for most Americans nothing much happened. The sun comes up every morning, and the earth turns. No wolf at the door. No public outcry.
In a new Associated Press-GfK poll, four out of five respondents say the shutdown has not impacted them at all. Unless you are a federal worker, or on vacation at a national park or need cancer treatments from NIH, the whole ugly mess just seems like one more dose of political dyspepsia.
Furthermore, as each day passes, the “shutdown” looks more and more like political theatre. Congress and the President agreed to give all furloughed workers their back pay, leaving every department free to call back “essential workers.” In response to the recent outrage over “death benefits” for fallen servicemen, both sides backed down and the President “expects this to be fixed.” The shutdown looks like a political sham.
Now we hear dire warnings about October 17. “Something wicked this way comes!” say the alarmists. They wring their hands, don sackcloth and prophesy a catastrophe of biblical proportions—they sound almost like “Ghostbusters.” Interest rates will soar, home values will plummet, stock markets will crash, and global economies will crater.
“Forty years of darkness! Earthquakes, volcanoes… Human sacrifice, dogs and cats, living together—mass hysteria!” (Dr. Venkman, of Ghostbusters fame).
But why should the Tea Party radicals in Congress, or your average American Joe or Ethel, believe it this time? They have heard “Wolf!” thrice, yet the country stands. The schools are open, Social Security checks are in the mail, and the stock market hasn’t crashed.
This Democratic over-sell probably explains the most perplexing item in the recent poll. Six in ten of us believe default will cause an economic crisis, but only 30% support raising the debt limit. No wonder the Tea Partiers are holding their ground.
In reality, sequestration and the shutdown have done real, lasting damage to the economy and to the Joe and Ethels of the world. By manufacturing a fiscal crisis out of whole cloth, Tea Party radicals have cost taxpayers and hard-working families real money out of their pockets. They put our health, safety and national security at risk. They have made us look childish and incompetent to creditors and governments around the world, which has an actual dollar cost. But this is nothing compared to the devastating havoc a default will probably wreak.
But because the dangers were so over-hyped, and because the bill has not come due for the vast majority of us as we sit around our kitchen table, we can kid ourselves that the wolf will never come.
In his translation of Aesop’s Fables in 1722, the Reverend Samuel Croxall warned, “When we are alarmed with imaginary dangers in respect of the public, till the cry grows quite stale and threadbare, how can it be expected we should know when to guard ourselves against real ones?”
The Democrats should heed Aesop—you can only cry “Wolf!” once.