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What, Me Worry? (Part 1) What, Me Worry? (Part 1)

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Fiscal Policy

What, Me Worry? (Part 1)

Main Street: We’ve Got Bigger Problems

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Main Street: Unhappy about soaring federal debt and uncertain about raising the limit.(Jeff Baughan)

PARKERSBURG, W.Va.—In this graying, ex-factory town on the Ohio River, residents worry a lot about what’s coming out of Washington. At the Rotary Club, they worry that new layers of red tape will strangle local banks, reduce credit for small businesses, and choke off their budding economic recovery. At City Hall, they worry that cuts to federal grant programs will blow million-dollar holes in the town budget and possibly require another round of fee increases on residents. In a meeting at the courthouse annex with their member of Congress last week, they worried about federal restrictions on incandescent lightbulbs, attacks on coal mining, and the mounting toll of federal borrowing.

But if you ask people here how much they worry about raising the federal debt ceiling—the battle now raging in Congress—the most common answer boils down to … not much. Even the most politically attuned civic and business leaders don’t know how heavily to weigh the implications of a possible federal debt default. So, instead, they add that risk to a deep bucket of anxieties about dysfunction in Washington and economic struggles at home. Few residents say they’re spoiling for a showdown over raising the ceiling; equally few are panicking over the threat of default. They know it’s an issue, but they’re not sure how dangerous it is. They want federal lawmakers to buckle down, set things straight, and let everyone else get back to the day-to-day challenges of earning a living and raising a family.

 

(RELATED: Wall Street—Congress Can’t Be That Dumb)

“We have enough of our own problems,” said Parkersburg Mayor Robert Newell, when asked about the debt ceiling at the end of a long conversation about the city’s sagging budget. “I don’t dwell on it.”

National polls show a deep split between what most economists and policy experts think about the debt-ceiling debate and what voters believe. The experts, regardless of party affiliation, all but unanimously agree that refusing to raise the ceiling would torpedo the national economy. By contrast, a Gallup Poll this month showed that nearly half of Americans don’t want to raise the borrowing limit; only 19 percent favored it. That should give Wall Streeters pause. In their comments, but even more in the prices they pay for Treasury bonds, investors and money managers make it clear that they see virtually no chance that Congress would actually allow the government to default. Thus far, though, Congress is feeling little if any pressure from Main Street to raise the ceiling—and at least some pressure not to raise it at all.

 

Infographic

Parkersburg, with a population of 32,000, is West Virginia’s third-largest city. It also happens to be home to the U.S. Bureau of the Public Debt, the department that literally borrows the money to keep the federal government running. Yet even business leaders are confused about the debt-limit tug-of-war. “I just think there’s so much uncertainty” about the impact, said Randy Brooks, executive vice president at Community Bank of Parkersburg. “I really don’t know what it would mean for us.”

The Obama administration hasn’t had much success raising the public’s sense of alarm. Treasury Secretary Timothy Geithner’s increasingly apocalyptic warnings, in letters to Congress and in countless public appearances, haven’t cracked small-town America’s consciousness. In Congress, a growing number of Republican senators and representatives are downplaying the potential consequences of failing to raise the ceiling before August 2, when Treasury officials estimate they will have exhausted the “extraordinary measures” they have been using to keep the government running after it hit the debt ceiling last week.

In some cases, lawmakers appear to be condoning voters’ beliefs that the debt-ceiling debate is a manufactured issue. Republican Rep. David McKinley, a freshman member who represents West Virginia’s sprawling and longtime Democratic 1st District, began a town-hall meeting here last week by lamenting that the federal government is borrowing $4.3 billion a day, the equivalent of the state of West Virginia’s entire general budget for a year. He mentioned that the federal government had hit the debt ceiling a couple of days early.

 
“I don’t dwell on it,” —Robert Newell, mayor of Parkersburg, W.Va., when asked whether he worries about the risk of a federal debt default.

One resident interrupted McKinley, complaining that officials were now saying that the real deadline was August and suggested that they would probably just move the date again.

In truth, there wasn’t any political sleight-of-hand: Treasury officials have said for months that they could keep the government afloat for about two and a half months after hitting the official ceiling, essentially by using an array of bookkeeping tricks. But Geithner and others have also said that those gimmicks go only so far, and that real disaster will ensue when the government can no longer borrow more.

This article appears in the May 28, 2011 edition of National Journal Magazine.

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