Austan Goolsbee: Hitting Debt Ceiling Would Be 'First Default In History Caused Purely By Insanity'

NEW HAVEN -- There are, it seems, only two major issues that have a set time frame for political brinkmanship between the White House and Congressional Republicans. The Bush tax cuts will make for an interesting election-year dynamic when they expire in two years. Well before that, however, the president will have to persuade GOP leadership to ignore Tea Party insistence and allow for the country's debt ceiling to be raised.

That issue is set to come to a head this spring. So far the administration has been (or perhaps just expressed a sense of being) self-assured that the ceiling will be raised, but on Sunday its rhetoric was noticeably sharper.

Appearing on ABC's "This Week," Austan Goolsbee, the chairman of the Council of Economic Advisers, laid out the fairly alarming implications of the United States defaulting on its obligations while asking the question: What type of insanity would persuade us to do this?

Well, look, it pains me that we would even be talking about this. This is not a game. You know, the debt ceiling is not something to toy with. If we hit the debt ceiling, that's essentially defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic. That would be a worst financial economic crisis than anything we saw in 2008.

As I say that's not a game. I don't see why anybody's talking about playing chicken with the debt ceiling. If we get to the point where you've damaged the full faith and credit of the United States, that would be the first default in history caused purely by insanity. There would be no reason for us to default other than that would be some kind of game. We shouldn't even be discussing that. People will get the wrong idea. The United States is not in danger of default. We do not have problems with that. This would be lumping us in with a series of countries throughout history that i don't think we would want to be lumped in with.

The good news for Goolsbee and the president is that House GOP leadership does seem to see the deficit ceiling debate a bit differently than their incoming Tea Party brethren -- as does the intellectual establishment of the Republican Party, including George Will, who, following Goolsbee on ABC, criticized the idea of defaulting simply for symbolic reasons.

UPDATE: It's worth noting, as CBS Radio Mark Knoller does, that "the Debt Ceiling now stands at $14.294-trillion. The National Debt is now $423-billion away at $13.871-trillion and rising."

LATER UPDATE: Huffington Post's Ryan Grim notes that there is, in fact, a third issue with a set time frame for a showdown. The continuing resolution funding government -- which was put into law during the lame duck session -- expires in March 2011, leaving Congress with some tough choices over how to budget going forward.