Obama’s debt ceiling alarmism is hurting the economy

I’ve never been sure that the Obama team understood or agreed with this view. As a candidate and even as president, Barack Obama has been uneven in his handling of economic distress. At times he has appeared presidential, but at others seemed willing to predict the worst “unless” his policies were adopted (think back to the debate over the stimulus bill). This has the same feel. Goolsbee’s quote — “The impact on the economy would be catastrophic. I mean, that would be a worse financial economic crisis than anything we saw in 2008.” — has no business being uttered by a prominent administration official…

The administration now requires a new narrative as cover for its liberal agenda. In this version, Republicans are the fiscal dangers. This narrative emerges in the argument that repealing the health care law will raise the deficit (a tribute to budget gimmicks). It is at the heart of the notion that the House “cut-as-you-go” spending rules are a budgetary danger (ignoring the fact that if the problem is spending, then rules have to deal with spending).

And, finally, it is at the heart of Goolsbee’s claim that “insanity” will cause the U.S. to default. There is no serious drumbeat in favor of sovereign default. Republicans and responsible Democrats are committed to meeting U.S. obligations. And Republicans are not “dangerous” because they will insist that spending go down instead of continuing to rise; they are just dangerous to a policy agenda that the American people have already rejected.