We Can Crash Into Debt Limit "Because the Only People Buying Our Bonds Are the Federal Reserve"

My latest piece explains why the business world's expectations on the shutdown crisis -- that the backlash might make Republicans ready to deal on the debt limit -- was folly. Republicans believe that the sequestration fallout, and the shutdown fallout thus far, have been goosed by Barack Obama in an attempt to maximize the damage to their party. That makes them less likely, not more likely, to raise the debt limit in a hurry. The theory that the government could hit the limit then just prioritize spending on debt service, troops and entitlements is widely accepted, more than Democrats like to think.

The whole story seemed a little House-centric, so I ended the day at the Senate, asking the Republicans who are seen as potential deal-makers there whether the people who said we could prioritize debt and crash through the ceiling were right.

"They're right on that, and I think the administration could work on who gets paid and who doesn't in a way that would pull us through," said Utah Sen. Orrin Hatch, ranking member of the Senate Finance Committee. "I don't think the markets have been spooked so far, and I personally believe that if they realized there was a legitimate attempt to make the government work, they would be less likely [to be spooked]."

http://www.slate.com/blogs/weigel/2013/10/07/republican_senator_we_can_crash_into_debt_limit_because_the_only_people.html