How to Deal With the Debt Ceiling

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Matt Yglesias is pondering what Obama should do if the debt ceiling isn't raised:


The best way to handle this, in the first instance, is to pay contractors with IOUs. The firms that supply the United States military aren't cash-constrained and they don't want to give up the Pentagon as a customer. If we ask them to keep doing the work and just promise to pay them after congress raises the debt ceiling, they'll almost certainly keep paying the troops.

Matt is thinking like a wonk, not a politician.  What Obama should do is the exact opposite of this sensible advice: he should make preparations to shut down the machines that write Social Security checks and army paychecks, lamenting that he has no choice because the US is contractually obligated to pay its other bills.  The GOP is betting that Democrats will take the blame for this.  I think that is a very bad bet.  


This is why schools and other government agencies facing budget cuts tend to immediately slash something high-profile and politically popular.  That's how you get them to reverse the budget cuts.  I'm sure most of us in the private sector can recount situations where this has worked in corporations as well.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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