Krugman predicts debt-limit disaster

The New York Times columnist sees dark days ahead

By Elias Isquith

Published October 4, 2013 5:27PM (EDT)

Paul Krugman                                                                                                                                                                   (AP/Lai Seng Sin)
Paul Krugman (AP/Lai Seng Sin)

Paul Krugman took to his New York times blog on Friday to warn that "aggressive blunderers" among the GOP leadership were increasing the likelihood of the United States failing to lift the debt-limit by the Oct. 17 deadline.

Arguing that "GOP leaders fundamentally misjudged the situation (and Obama's incentives)," Krugman writes that Republicans have "backed themselves into a position where they don’t know how to back down." Obama, for his part, cannot concede "without destroying his own credibility and betraying the fundamental norms of governance."

Krugman then tries to predict what he calls the ultimate "endgame" of the crisis, writing that despite what many believe, a market "freakout" will not compel Republicans to raise the debt limit. "[G]iven their behavior so far, why would you believe this?" Krugman writes. "I can easily see Ted Cruz making a speech declaring that the freakout is all Obama’s fault, and that what the markets really fear is socialism or something — and the base believing it."

The award-winning economist goes on to write that, ultimately, he believes an "extraordinary action" on the part of the president will be needed to resolve the crisis, but that Obama cannot communicate his willingness to take such an action yet because he has to "demonstrate [Republicans'] utter irresponsibility."

He ends on a down-note, however, worrying that White House lawyers may be unable to concoct a legal rationale to allow Obama to ignore the debt limit. "If so," he writes, "God help us all."

Elias Isquith

Elias Isquith is a former Salon staff writer.

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Debt Limit Paul Krugman Republican Party Ted Cruz The New York Times