Ezra Klein is conducting a debate with a couple of people (including Jon Chait) who argue that the president should set aside the debt limit as an unConstitutional limit on the authority of the Treasury. Ezra opposes such a move:

No one is worried that the American government doesn’t have the financial capacity to pay its debts. Any default would be temporary, and the result of political jockeying. But what would potentially devastate the markets is a process that suggests they’ve misunderstood the strength of the American political system, that suggests we can’t reliably do easy, obvious things like paying our bills and thus won’t be able to do harder, more challenging things like fixing our health-care system. And that’s when the market begins wondering if we really will be able to cover our debts later, and that’s when they begin charging us higher borrowing rates and diversifying into other currencies. [...]

But that confidence is, I suspect, largely dependent on this debt-ceiling fight looking pretty much like past debt-ceiling fights. So long as bond traders are calling their political fixers and hearing reassuring things about how they’ve seen this before and this is just how Washington works and there’s no way that Boehner and Obama won’t come to a deal before Social Security checks stop going out, they’ll give us time to work it out.

He goes on to argue that the uncertainty over the legal ramifications could cause instability on the market:

“Yes, the first round of debt-ceiling negotiations failed, but we always knew that was likely to happen. Now we’re moving to a fairly predictable second round. Bond rates aren’t spiking. The market hasn’t been caught by surprise and forced to dramatically reassess its confidence that this will ultimately be resolved. Now’s not the time to overturn the chess board.”

I think this is a reasonable argument, and I’d agree that now is not the time to actually abrogate the debt ceiling. However, let’s think about the situation. Republicans have taken a position that a debt default isn’t such a bad thing, that it’s just another thing to be used as leverage to get the sorts of cuts they like. Increasingly, they’re arguing that any revenue-raising elements at all are off-limits. As usual, they want a “compromise” that just gets them everything they want. Assuming they are going to stick to these stances–which they possibly might not, but I honestly have no idea and neither do you–then you have a scenario that’s all too familiar these past few years.

This is ultimately a question of strategy. Broaching the “Constitutional Option” now would be a mistake, admittedly. However, hinting at it, keeping it open as a possibility, doing the preparatory legwork to enact it as a last-minute fait accompli in order to forestall a default if the talks fail, is not only prudent, but good politics as well. It would change the trajectory of the debt negotiations considerably by removing much of the Republicans’ leverage, and the cost would be pretty minimal. Sure, the bond vigilantes might have a cow, but I suspect that they’d prefer it to a default. And doing it at the after the talks fail at the last minute would probably make court action against it impossible, since no judge is going to want to make a ruling that immediately causes another recession.

Now, it’s entirely true that ignoring the debt ceiling would expose how dysfunctional our political system has become, the toxic degredation of partisanship and the rise of ignorance. That could hurt US credit in the bond market. But Ezra baffles me here. Who are we fooling? Given how our political system has operated over the past decade, I’m not sure our bonds merit a AAA rating at this point. If it takes GOP-enabling Wall Street bondholders losing their shirts to get this hammered home, that’s just how it goes.