Why This Default Debate Is Different

Yet after Gingrich and Majority Leader Dick Armey suggested they might go so far as to allow the government to default on its debt, the political mood changed dramatically. Standard & Poor’s and Moody’s issued warnings and Wall Street, whose views were channeled by then-Federal Reserve Chairman Alan Greenspan in private meetings with Republicans, made its unhappiness known. Following two unpopular government shutdowns, “the idea of default became so politically charged that few people wanted to be associated with it any longer,” former Treasury Secretary Robert Rubin wrote in his 2003 memoir, In An Uncertain World. “At some point, our opponents simply stopped fighting.”