Morning Quote: Defaulting on the National Debt

The GOP House, led by Speaker John Boehner (R-OH), has been making a lot of noise recently, spinning their efforts to blackmail Democrats in to deep Medicare cuts by refusing to raise the debt ceiling, as something less than the economic disaster it would certainly be.

Today, during a panel discussion of former CBO heads, well known Republican economist, Douglas Holtz-Eakin was pointed in his opinion of this scenario:

“Little defaults, big defaults; default's a bad idea period and there should be no one who believes otherwise.

The idea that somehow it's a pro-growth strategy to raise interest rates on a permanent basis in the United States is just crazy. We need to grow at this point more than anything else.”

According to TPM, “Holtz-Eakin has supported the GOP's efforts to secure cuts in exchange for raising he debt ceiling, but made clear that at the end of the day it had to be raised. He cited numerous dangers from a default scenario, such as its effect on the bond market.  He added that the market would not be easily reassured even after a brief default, likening it to wrecking one's house and then asking for a second mortgage on the property.”

The CBO director under President Reagan, Rudy Penner, was also pointed in his opinion regarding the idea of allowing a default to happen: