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In 1979, Congressional Democrats and Republicans got into a pissing match and the debt ceiling ended up being the political football de jour. Then, as now, economic experts warned of serious consequences for not increasing the debt limit. Only a few hours from default Congress finally agreed to raise the debt limit to $830 billion.
The result of this childish game was thousands of late payments for Treasury bill holders, resulting in approximately $120 million worth being paid out weeks, even months late, and the whole ordeal undermined confidence and likely cost quite a bit in investments. Worse still, according to experts of the time, the United States would have defaulted resulting in a lowered rating from AAA to B+.
Consider that instead of looking at an $830 billion debt, we're currently looking at a $14.3 trillion debt, a severely unbalanced budget, conservative groups screaming bloody murder for more tax cuts (that is, revenue cuts in a time of severe financial need for revenue), and the tax cuts and wars that are in large part responsible for the level of financial distress we're in have no end in sight. If you were responsible for the United States' credit rating, what would you be thinking now that political posturing is leading the country on a collision course toward default?
If the debt ceiling isn't raised, it will be the fault of conservative and neconservative policy, but that won't matter because the country will collapse. It will be a major historical footnote, perhaps a pitiful moment in human history reflected back on to talk about how stupid politics can lead to the end of great civilizations. We'll be spoken of the way people now speak of Rome or Greece, lamenting the loss of a great society that destroyed itself.
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