Will U.S. go “Slow dancing in a burning room” with the risk of default once again come January? Larry Summers says “Not likely”
Larry Summers, Harvard president, former Treasury secretary and, until recently, Fed chairman favorite states that Washington won’t flirt with default again once the current debt ceiling is reached (Early January).
“The good news is that even the most foolish of people, having shot themselves in the foot, rarely reload. And therefore I think it is very unlikely, exceptionally unlikely, that we will see another government shutdown or another march to the brink of default of this nature,”.
With the mid-term election drawing near, any political maneuvering that would be of a similar vein to the actions of the past recent months could prove damaging to current incumbents that flirt with the idea of generating a self imposed “default”.
Given the public opinion results of recent polls, members of the House are incentivized essentially to not flirt with the condition of a forced default within the coming year given the opinion backlash most recently witnessed.
“In part, the fact that the [congressional midterm] election is drawing near, and those who push us towards the brink of default do not seem to have been rewarded politically, will act as a discouragement.”
Will the moderate base of the Republican party seems to agree with Summer’s comments do not be to hasty in ruling out the possibility of another impase in the coming months. Tea Party backed candidates such as Sen. Ted Cruz of Texas who became the face of the looming default by attaching a repeal of the Affordable Care Act (Obamamcare) to the continuing resolution to fund the government’s operations and authorization to raise the debt ceiling returns to his district a celebrated representative to the folks who put him in office in the first place. SE. Cruz along with other members of the House and Senate did exactly what they were elected to do “Defund Obamamcare” as it was one of the platform issues they ran on and were elected to pursue.
Will we see a repeat of a possible default come January? Hard to say…
But in Washington, anything is possible.
- Larry Summers: ‘no time for austerity’ (blogs.marketwatch.com)
- Larry Summers is convinced Washington won’t flirt with default again in a few months (soshitech.com)