Bob Woodward has a new book out, The Price of Politics (review), taking an inside look at the U.S. debt crisis from the summer of 2011, where the federal government came within just $5 billion, or just half a day’s worth of its typical spending, of defaulting on its debt payments. While much of the focus on the story has been on its revelations that President Obama had no “Plan B” in case the deal being negotiated by congressional leaders broke down, which led to his being dressed down directly to his face by a congressional staffer, perhaps the most disturbing excerpt provided by the Washington Post from Woodward’s book involves how the crisis finally played out in the mind of U.S. Treasury Secretary Timothy Geithner:
Geithner thought there was one other consideration. He did not mention it to anyone, not even the president, but he had thought about it a great deal. It was not just that Obama faced an economic choice or a political choice. He faced a moral choice.
The president should not put himself in the position of saying unequivocally that he would veto, Geithner concluded, for one simple reason: No one could be sure how to put the American or the global economy back together again. The impact would be calamitous.
“And the people who would bear the pain of that would be the people less prepared,” Geithner told others, “less able to absorb that cost. It would be something you could not cure. It is not something you can come back and say, a week later, ‘Oh, we fixed it.’ It would be indelible, incurable. It would last for generations.”
Obama never had to confront the veto question. A few days later, House Republicans dropped their insistence on the two-step plan. The final plan accepted a debt limit increase that would take the country through the 2012 presidential contest. It also postponed $2.4 trillion in spending cuts until early 2013.
The long-term deficit crisis had not been solved, but merely put off, leaving the United States at the edge of the fiscal cliff, where it remains today.
Perhaps the most disturbing element of this story, aside from the documented failures of leadership and the fact that it will resurface within weeks after the November 6 election, is that the U.S. Treasury Secretary never thought to provide this kind of council regarding the consequences of defaulting to the President, or anyone else, while the crisis was ongoing. And that is yet another failure of leadership.