Gov. Scott Minimizes Consequences Of Default: "The Market Has Already Priced It In"

July 26, 2011 3:08 pm ET — Kate Conway

Gov. Rick Scott

Reasonable people — and even quite a few relatively unreasonable people — recognize that the debt ceiling must be raised in order to avoid economic catastrophe. Quibbles over ­whether the debt ceiling needs to increase are no longer at issue; what's holding up negotiations is Republican leaders' demand for severe spending cuts — and more recently, their determination to refuse any offer of compromise from Democrats.

Even some of the most hard-right Republicans have reversed their ideologically driven opposition to raising the debt ceiling once the reality of the consequences hits home. Mere months after suggesting that there should be no lift at all in the debt limit without spending cuts, Gov. Bob McDonnell (R-VA) changed course and urged Congress to act "immediately" once he realized a federal downgrade could also harm his state's credit rating.

But Gov. Rick Scott (R-FL) has seen no such light. Providing further proof that his self-acclaimed experience as a businessman isn't backed up by any genuine understanding of markets or even common sense, Scott is ignoring the advice of economists, credit rating agencies, and the business community to insist that there would be "minimal" impact if the debt limit isn't raised because "the market has already priced it in." From the Miami Herald:

"The impact would be minimal," Scott said. [...] "I don't think anybody knows, because it's never happened," he said. "I believe the markets understand where the federal government is. They understand where the spending is, so I think the market has already priced it in."

So what would Scott do to break the impasse in Washington?

"I would not increase the debt ceiling," he said. "I would take this opportunity to really restructure government and really look at how we're spending our money."

Reasonable people don't form arbitrary beliefs about what the market will or won't do. They evaluate the evidence, listen to the experts, and make an informed decision. And to a reasonable person, warnings about a credit downgrade that would raise borrowing rates and throw the global economy into chaos wouldn't look like an "opportunity to really restructure government"; it would be a wake-up call that the U.S. had better get its act together to pay its bills before the consequences are irreversible.