Good grief, that was fast:
Failure by Congress to raise the U.S. debt limit "could plunge the world economy back into recession," President Barack Obama declared Friday, and he acknowledged that he must compromise on spending with Republicans who control the House to avoid such a crisis.
"I think he's absolutely right that it's not going to happen without some spending cuts," the president told The Associated Press in an interview in his hometown, agreeing with House Speaker John Boehner's assessment.
Congress has the power to spend whatever it wants, but not paying off the debt it incurs is a violation of the U.S. Constitution. It would wreak havoc in the financial markets, and send the economy into a second steep decline since 2008. Yet the Democrats -- Harry Reid said the same thing -- are conceding that we have to make budget cuts in order to raise it?
Matt Yglesias had it right:
This isn’t a sudden “shutdown.” Nor is is true that we have to default on obligations to our bondholders. Rather, it means that government outlays are now limited by the quantity of inbound tax revenue. But for a while, the people administering the federal government (to wit Barack Obama and Timothy Geithner) will be able to selectively stiff people. So the right strategy is to start stiffing people Republicans care about. When bills to defense contractors come due, don’t pay them. Explain they’ll get 100 percent of what they’re owed when the debt ceiling is raised. Don’t make some farm payments. Stop sending Medicare reimbursements. Make the doctors & hospitals, the farmers and defense contractors, and the currently elderly bear the inconvenient for a few weeks of uncertain payment schedules. And explain to the American people that the circle of people who need to be inconvenienced will necessarily grow week after week until congress gives in. Remind people that the concessions the right is after mean the permanent abolition of Medicare, followed by higher taxes on the middle to finance additional tax cuts for the rich.
Why they would negotiate in order to raise the debt ceiling is a mystery. The Dems should hold firm, pop some popcorn and let the Tea Partiers fight it out with the Wall Street conservatives.