Will the Markets Panic After a Stunt Debt Ceiling Vote?

Weigel
Reporting on Politics and Policy.
May 24 2011 2:50 PM

Will the Markets Panic After a Stunt Debt Ceiling Vote?

Asked today about a Republican plan to bring up a "clean" debt limit bill -- a bill that will surely fail in the House -- Harry Reid pointed to yet another example of the opposition's recklessness.

"My personal feeling is that I think I sends a terrible message to the international community," he said. "They're bringing up something that they know is going to fail. How does that help what we're trying to do?"

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McConnell got the same question, and scoffed at it.

"Gosh, I don't agree with that," he said. "I think it's important for the markets and everyone else to understand that Congress doesn't intend to raise the debt limit without doing something about spending." Moreover: "It'll be interesting to see how many of the members of the House, of either party, think it's a good idea to raise the debt ceiling without any reductions in spending at all."

McConnell gets the better of the argument. The owners of sovereign debt who are making these decisions are not idiots; they're able to tell the difference between stunt votes and meaningful votes. If the markets expect a vote that will solve the debt ceiling impasse, and that vote fails, then there's chaos -- think of the first failure of TARP. But a vote on the debt limit that no one expects to pass will be interpreted as... a meaningless vote.

David Weigel is a reporter for Bloomberg Politics