Dear Rep. Yoho: Not Paying Your Bills Does Not Reduce Your Debt

An unfortunate side effect of our democracy is that people with very little understanding of economics are sometimes put in the position of determining the course of the U.S. economy. That’s bad. What’s worse, though, is when someone with no common sense is put in there. Meet freshman Rep. Ted Yoho (R – FL):

“I think we need to have that moment where we realize [we’re] going broke,” Yoho said. If the debt ceiling isn’t raised, that will sure as heck be a moment. “I think, personally, it would bring stability to the world markets,” since they would be assured that the United States had moved decisively to curb its debt.

Where to even start? First off, no economist believes that a default by the United States will in any way, shape, or form bring ‘stability’ to the market. In fact, the very idea that default may actually happen has bond markets nervous. The consequences of a U.S. default would be grave and globally reaching. But more than this seeming ignorance of economics, there is a much more troubling area of concern with Rep. Yoho’s statement.

Republicans — actually, I should say ‘deficit hawks’ of either party — are keen to draw parallels between household and government budgets. Typically, this is done because it makes easy talking points with a less economically literate public. It is, of course, a bad analogy, as there is very little equivalence between the two. Nonetheless, our current age of austerity has been brought about by politicians and a public bought-in to this idea. So let’s run with it…

The moment when a household “realize[s] we’re broke” and chooses to stop paying its bills (and that is the definition of not raising the debt ceiling) is not a stabilizing event. It will wreak havoc on their financial situation for years to come. Moreover, it doesn’t reduce the debt. If anything, that debt grows exponentially through higher default interest rates and added fees. The only way not paying your bills reduces your debt is if you decide to declare bankruptcy.

So is Ted Yoho suggesting the United States go bankrupt? Well he hasn’t said as much, but I’m not sure I’d put it past him. What we’re looking at is a freshman tea party republican getting very little constituent feedback, and the feedback he does get is from supporters egging him on. He sees no down side to this kind of rhetoric. And possibly he even believes the words flying out of his mouth.

Still, if you think that any of this shutdown and debt ceiling drama is about the debt, I’ve got a nice bridge you might be interested in. But that’s a topic for another post…

By: Sandi Behrns

Sandi Behrns is a noted policy nerd, new media & web developer, and consultant to progressive organizations and campaigns. She is a senior contributor to Liberaland, and the Executive Editor of Progressive Congress News.