An ‘economic justification’ for raising the limit once, not twice

As truly ridiculous as this may be, one of the key sticking points in the debt-ceiling crisis is the sudden Republican insistence that we go through this process twice, instead of once. As GOP leaders see it, the only legitimate solution is one debt-limit increase now, and another early next year. Democrats and other sane people prefer to just go through this once, taking default off the table until 2013.

House Speaker John Boehner (R-Ohio) has been championed the two-step process, and today, he was backed up by Senate Minority Leader Mitch McConnell (R-Ky.). “There’s absolutely no economic justification for insisting on a debt limit increase that brings us through the next election,” McConnell said, adding that Democrats are only concerned with politics.

Republicans said the opposite as recently as last month, but let’s put that aside for now.

Instead, let’s just look at McConnell’s argument on the merits. Is there an economic justification for extending the debt limit through the end of next year? Of course there is. Here, for example, is the chief executive officer of NASDAQ, testifying to the Senate this morning.

If you can’t watch clips online, CEO Robert Griefeld told lawmakers, “Markets certainly want to feel certainty…. [T]he longer the deal the Congress makes, in agreement with the president, the better markets will feel about it.”

He’s not alone. Standard & Poor’s is threatening a credit-rating downgrade if there’s a short-term extension and the CEO of PIMCO warned against such an approach.

I have no idea if Mitch McConnell believes his own nonsense. I also can’t say why in the world he’d want to go through this entire mess all over again early next year. But if he thinks there’s “absolutely no economic justification” for a longer debt-limit extension, McConnell need only call one of the many Wall Street lobbyists he keeps on speed dial to get a very different opinion.