New Piece in the Philadelphia Inquirer: Risk of a U.S. default has been exaggerated: History and the bond markets contradict the hype

My piece in the Philadelphia Inquirer starts this way:

A failure to raise the federal debt ceiling could "roil the financial markets and cause severe economic problems," "cause profound damage to our country," and have "dire consequences." So wrote the Los Angeles Times, the Washington Post, and the New York Times - in 1995.

Other ills predicted at the time were rising unemployment, reduced economic growth, and soaring interest rates. This was as President Bill Clinton and other Democrats were fighting off Republican attempts to link increasing the debt limit to cutting the budget deficit.

Then, as now, there was a widespread misperception that failing to raise the debt ceiling would lead to a default. The Washington Times reported that "congressional Republicans are threatening to provoke the nation's first-ever default." The Los Angeles Times warned of "the first real risk of a government default." Even Federal Reserve Chairman Alan Greenspan said Republicans should back down because, "To default for the first time in the history of this nation is not something anyone should take in any tranquil manner." . . .