07 August 2011

The debt deal's biggest losers

George W Bush's former speechwriter David Frum on the GFC:

The debt-ceiling debate feels like one of those tragic episodes out of the history of the fall of republics. To gain their point on a budget matter, Republicans did something unprecedented in the annals of American government. They made a bargaining chip out of the public credit of the United States. In a well-functioning democracy, certain threats are just not used, and the threat to force the country into default should rank high on the list of unacceptable threats.

Yet congressional Republicans not only issued the threat, they did so successfully. They have changed the rules of the game in ways that will have ramifications for a long time. Maybe Democrats will copy them. Or maybe Republicans will do it again. Either way, something that was once unthinkable has become thinkable. Any holder of U.S. government bonds has to feel a little less confident of the security of his or her investment after this summer's debt-ceiling episode.


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