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Toomey and the debtpocalypse

Published by Daniel Malloy on .

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According to Oakland, Calif., pastor Harold Camping, the world will end on Saturday. According to Tresury Secretary Tim Geithner, it will end sometime in early August.

Camping's prediction is Biblical, while Geithner's deals with the decidedly more mundane issue of the nation's borrowing limit. We reached the $14.3 trillion Congressionally mandated debt limit this week, but Geithner has said that he can move some money around to keep a crisis at bay until early August -- when something will really hit the fan.

Sen. Pat Toomey has spent his early months on the job trying to disspel the notion that hitting the debt limit will be apocalyptic. Geithner says missing any payments to vendors and the like will amount to default by another name and be "catastrophic" for the markets. Toomey has introduced a bill -- which failed in a Senate vote -- and has otherwise been pounding the drum in op-eds and a tour of conservative think tanks.

This morning it was the American Enterprise Institute, a group packed with academics looking to further the notion that the government should stop impeding private enterprise. It's a Toomey crowd, and he gave them his now-familiar debt limit stump speech, describing the unsustainable path of spending and knocking down Geithner's hand-wringing by saying that the bond markets didn't freak out when we were on the verge of a government shutdown so the debt limit should be the same thing.

Today's speech had a new hero: Duquesne Capital's Stanley Druckenmiller, the billionaire trader -- and rabid Steelers fan who made a failed bid to buy the team in 2008 -- who told the Wall Street Journal recently that hitting the debt limit would not bring on the rapture and it's more important to get the country's long-term fiscal house in order. Toomey, playing off his own background as a bond trader, later said that Wall Street mavens privately tell him the same thing, even though The Street is publicly lobbying to raise the borrowing limit ASAP. (Meanwhile, all this talk of Toomey's trading history and consultation with Wall Street has the Joe Sestak campaign banging its head against the wall.)

Toomey insists that he wants a deal to raise the debt limit, and it would be "disruptive" not to. But a deal got more unlikely Tuesday as Sen. Tom Coburn, R-Okla., dropped out of the ballyhooed "Gang of Six" bipartisan budget negotiations. In retrospect, this move was previewed when Coburn signed on to Toomey's budget proposal last week.

"It's a sign that a proposal is less likely to pass the Senate," Toomey said of Coburn's apparent departure from the talks. Pressed by the Washington Post's Dana Milbank (a former Post-Gazette intern) on whether he'd accept any increase in revenue along with spending cuts in a budget deal, Toomey said only that he'd support tax simplification that would raise revenue from economic growth, which he proposes in his budget. Democrats insist that more revenue must be part of a budget deal, though Toomey noted that any tax hikes would never get through the House.

What Toomey wants in exchange for a debt ceiling hike is a balanced budget amendment, mandatory spending caps and/or severe cuts in the 2012 budget. In the CR debate -- though it dealt with peanuts compared to this -- the sides seemed similarly entrenched and yet came to a deal at the last minute. Toomey acknowledged that talks will likely bump up against the deadline, noting it's rather convenient that Geithner put it right before August Congressional recess, but the whole jist of his argument is that blowing the deadline won't be as bad as Democrats claim and the real rapture comes when we are up to our ears in debt like Greece.

Or maybe the world ends on Saturday and none of this matters anyway.

Above: The Four Horsemen of the Apocalypse.

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