James Galbraith is a professor of economics at the University of Texas at Austin, author most recently of The Predator State and chair of Economists for Peace and Security. Speaking to FAIR's radio show CounterSpin (7/15/11), Galbraith pointed out that there could be real effects from defaulting on our debt, which is why it's unconstitutional.
JG: The Constitution states very clearly that once the government makes an obligation that is a firm commitment, that cannot be challenged and should not be challenged in the political process. So the people that have been raising these issues, who are elected officials that are sworn to uphold the Constitution, have really been acting in gross dereliction of their sworn duties--and I would add too, the prospect of using the debt ceiling to force a big deal on some other issue, in this case the long term budget outlook, is an extremely bad idea. Because once you do it once, basically you’ve legitimated government by blackmail and that’s the only kind of government we would have going forward.
CS: And yet you note in a recent piece (New Deal 2.0, 7/11/01) that this kind of attack on the ability or the authority of government to meet its debts has media support and elite support because, as you put it, it appears to be forcing the parties to do "what they should do anyway."
JG: Well, I put that in quotation marks because it is something which they definitely should not do in any event, and what you’re looking at here is a large body of elite opinion which basically has no respect for the processes of constitutional government that get in their way. It is quite difficult politically to impoverish old people and deprive the elderly of medical care, and that’s a good thing.
CS: There is certainly a great deal of fear-mongering about this looming fiscal crisis. You’ve said that you don’t really think the right questions are being asked.
JG: This notion that the long-term deficit looms over us is completely contrary to fact. The long-term deficit is, first of all, simply a projection that comes out of the computers of the Congressional Budget Office. I’ve showed in a number of articles that those projections are completely unrealistic [e.g., Washington Post, 5/6/10].
It’s not even close to being an important national priority when you compare it to the unemployment rate, to the foreclosure issues, to the energy issues, to the environmental issues that we face, to our crumbling infrastructure, which are complicated and require a serious, strategic approach to deal with them, but are nevertheless real problems. Whereas this thing is a ginned-up issue which is being used to spread panic and to pursue an ulterior agenda, namely, in particular, severely cutting back on Social Security and Medicare and Medicaid.
CS: It seems to me that media’s presentation of economic issues is not just confusing and sometimes obscurantist, but it’s also presented as if it weren’t contested territory. That there’s somehow some agreement about what a "good economy" is, rather than there being competing ideas about how we would even measure that. What is your biggest beef or concern with the way economic policy and debates like this debt ceiling debate are reported in the press?
JG: You’re quite right. The big problem is that there is a single narrative. One permitted line of thought. And it is stated as a premise in article after article without anyone asking, does this make any sense?