Bloomberg: Default or breakdown
The contest of wills under way in Washington is casually deceptive. Yes, it pits Republicans against Democrats, and the House of Representatives against the Senate and the White House. Yes, it is a partisan and institutional fight, with the all-too-familiar theater of dueling news conferences, apocalyptic threats and interest-group email blasts.
But this conflict bleeds outside the lines of traditional politics, carrying with it the potential to damage the nation in profound ways. Without a long-term agreement between the antagonists a proposed six-week reprieve from the debt ceiling would merely postpone the endgame President Barack Obama may soon face a choice between safeguarding democratic governance on one hand and protecting financial stability on the other. If this budding, bumbling crisis comes to that, disaster is all but guaranteed.
The U.S. cannot under any circumstances afford a default. The last time political dysfunction in Washington led us to the brink, during the 2011 debt-ceiling fiasco, Standard & Poor's downgraded U.S. credit for the first time in history, and Federal Reserve Chairman Ben Bernanke cited "disrupted financial markets and probably the economy" as a result.
The U.S. also cannot under any circumstances afford to normalize political extortion. In retrospect, Obama erred in 2011 by agreeing to Republican demands for vast spending cuts in return for raising the debt ceiling. That deal was a precedent- breaker; no previous increase in the debt limit had been subject to similar conditions. Obama must now make sure it was not also a precedent-setter.
Surely Speaker of the House John Boehner, R-Ohio, understands that the integrity of both the financial markets and the U.S.'s system of government must be secured.
Roughly a week remains before the "extraordinary measures" employed by the Treasury Department to stave off default become insufficient. Unlike the Treasury, Boehner has numerous options for resolving the crisis, including establishing a deal-making structure that doesn't depend on threats to harm the nation. His job in the days ahead is to make certain the House of Representatives rises to its duty, as it has on countless occasions in the past.
Boehner has a difficult job. But no choice the speaker confronts is as untenable as the one that will face the president if Boehner fails.
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