Two articles in today's New York Times make clear what I mean in the title above. First up, we have Republicans. On the front page is an article titled:
"Many in G.O.P. Offer Theory: Default Wouldn't Be That Bad"
"We always have enough money to pay our debt service," said [Senator Richard] Burr [R-NC], who pointed to a stream of tax revenue flowing into the Treasury as he shrugged off fears of a cascading financial crisis. "You've had the federal government out of work for close to two weeks; that's about $24 billion a month. Every month, you have enough saved in salaries alone that you're covering three-fifths, four-fifths of the total debt service, about $35 billion a month. That's manageable for some time."
Then there's Sen. Rand Paul (R-KY):
"If you don't raise your debt ceiling, all you're saying is, 'We're going to be balancing our budget.' So if you put it in those terms, all these scary terms of, 'Oh my goodness, the world's going to end' -- if we balance the budget, the world's going to end? Why don't we spend what comes in?"
"If you propose it that way," he said of not raising the debt limit, "the American public will say that sounds like a pretty reasonable idea."
Fine. Republicans say defaulting on our debt, which means the government not paying at least some of our bills, is no big deal. It's no big deal to put uncertainty into whether we mean what we say when we make a financial obligation. Doing that won't have any effect on our creditworthiness at all.
Then there's reality. The second NYT article appears on the front page of the Business section and is called:
"Deadlock Worry Jolts the Market for T-Bills"
The political impasse over the debt ceiling roiled a closely watched corner of the bond market on Tuesday, pushing up the price the government paid to borrow money for a month to its highest level since 2008, more than doubling from just a day earlier.
(snip) "This is our early-warning radar telling us that the bond market is beginning to focus on this as an increasing probability," said Jonathan Lewis, the chief investment officer at the asset manager Samson Capital Advisors. "When people are more and more concerned about credit, the first place that turns up is in the short-term debt."
B-b-but the Republicans said not to worry, that default wouldn't be such a big deal. The short-term bond market, on the other hand, says you damn well better worry, that default will cost this country a boatload of money. So either Republicans don't care, or don't know because they are locked inside an echo chamber that prevents what some of us call reality from entering ("Romney definitely is winning Ohio!").
Those quotations are both familiar and amusing, but really they should frighten to the core all of us who love this country. In this case, the rate the government pays on those short-term loans is the "canary in the coal mine," an early indicator of what's coming. And what it's telling us is that the whole mine is about to cave in. Let's see if Republicans are willing or even capable of observing reality and adjusting their approach accordingly. If not, they will take this whole country down with them.
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