One of the first things that Lenin's Bolsheviks and Mao's Communists did upon taking power was to repudiate the debts incurred by the regimes they'd overthrown. Debt, shmet, the commies said. These were payments to capitalist institutions and treasuries that took bread out of people's mouths. To hell with 'em.
How the wheel has turned.
Yesterday, the Chinese government -- specifically, its State Administration of Foreign Exchange -- declared it would be an act of irresponsibility for capitalist America to default on its debt. "We hope the U.S. government will earnestly adopt responsible policies to strengthen international market confidence, and to respect and protect the interests of investors," the agency wrote in response to questions on its website.
According to The Financial Times, which reported on this statement of China's position in today's paper, roughly two-thirds of China's $3.197 trillion in currency reserves is invested in "dollar-denominated assets" -- that is, in promissory notes from the U.S. Treasury. China is concerned, obviously, about its investment if the U.S. defaults.
To find people in our time who have a Lenin- or Mao-like indifference to the consequences of not paying up, we have to look to the Republican right, where the idea of not raising the U.S. debt ceiling at all still has its adherents, most prominently Michele Bachmann. In a CNN poll released today, 61 percent of respondents said that not raising the debt ceiling would cause either a crisis or major problems for the economy. Those who pooh-pooh the idea come almost entirely from Republican ranks. "Roughly half of all Republicans think that will create only minor problems or no problems at all," said CNN polling director Keating Holland.
Bachmann & Co., to be fair, don't go as far as Lenin and Mao did: They're not advocating repudiating the debt, just not paying it for the time being until their own brand of revolution -- the all-cuts-no-taxes revolution -- sweeps the land. But from their Ayn-Rand-Strained-Through-a-Tea-Party perspective, why not repudiate it? The debt was incurred by an illegitimate regime led by FDR, LBJ, Bill Clinton, and Barack Obama (never mind the debt incurred by Ronald Reagan and two George Bushes, nor the reduction in debt that came during Clinton's watch), which established welfare-state programs that never should have been enacted in the first place. What better way to make a clean break than to stick it to all those enablers of the welfare state who bought Treasury paper and to all those spongers off honest Americans who collect Social Security benefits? The course of the true revolutionary couldn't be clearer: debt, shmet.
