Republicans are threatening to let the American government default on its debt. Paul Krugman writes:
The crisis could be very severe. It’s not just that the federal government would run out of money, forcing curtailment of essential services. U.S. government debt plays an essential role in the global financial system because Treasury securities are used as collateral in financial transactions around the world. During the brief Covid-induced financial panic of March 2020 interest rates on short-term Treasuries actually went negative, as frightened investors piled into the safest assets they could think of.
Make U.S. debt unsafe — make the U.S. government an unreliable counterparty, because its ability to pay its bills is contingent on the whims of an irresponsible opposition party — and the disruption to world markets could be devastating.
The Republicans are ruthless. And Krugman writes, they have one goal -- to make things worse:
So ask yourself: If a party doesn’t care about the state of the nation when the other party is in power, and it knows that its opposition suffers when bad things happen, what is its optimal political strategy? The answer, obviously, is that it should do what it can to make bad things happen.
Sometimes the sabotage strategy is almost naked. Consider Ron DeSantis, governor of Florida. DeSantis has done everything he can to prevent an effective response to the latest pandemic wave — trying to block mask and vaccine requirements, even by private businesses. Yet this hasn’t stopped him from blaming President Biden for failing to end Covid.
And now comes the debt crisis. Nobody has ever accused [Mitch] McConnell of being stupid. He knows quite well just how disastrous failing to raise the debt limit could be. But the disaster would occur on Biden’s watch. And from his point of view, that’s all good.
Lots of smart people have made Faustian bargains.