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As Sen. Patty Murray said in her mid-July 2012 speech at The Brookings Institution, “So if we can’t get a good deal — a balanced deal that calls on the wealthy to pay their fair share — then I will absolutely continue this debate into 2013 rather than lock in a long-term deal this year that throws middle-class families under the bus.”
Though Murray’s comment may have been more of a negotiating ploy than a hard line, it reminded me of a March meeting I had with Senate candidate Eric Hovde, who was seeking the GOP nomination in Wisconsin.
Hovde, a businessman with an extensive background in finance, surprised me when he said that, if elected, he would not vote to raise the debt ceiling.
But wouldn’t that lead to a U.S. government default and to panic in the markets? I asked.
No, said Hovde, arguing that investors would know that any inability by the U.S. government to refinance its debt and meet its financial obligations would be nothing more than a “technical default” that ultimately would be resolved.
I’m not certain whether a “technical default” is like a “legitimate rape,” but a default is a default, and going over the fiscal cliff is just asking for trouble.
Yes, purely from a tactical point of view, Democrats might be better off going into next year with the Bush tax cuts expiring and the sequester cuts kicking in automatically. Then Democratic leaders could propose a tax cut for 98 percent of Americans and use some of the additional revenue to offset some of the worse cuts required by the sequester.
But even if that might be the best way for Democrats to achieve their goals, it is a hell of a way to make policy, and the risks to the U.S. economy would be enormous. That is something on which both the White House and the speaker seem to agree.
A last-minute deal on taxes and spending probably is still more likely than not, I suppose. But don’t expect any action as long as there is still plenty of time remaining on the clock.
Stuart Rothenberg is editor of the Rothenberg Political Report (rothenbergpoliticalreport.com).