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Editorial: Be Very Afraid

READERS OF THIS PAGE will remember that last week we expressed a hope that the government shutdown was the last toxic brew cooked up by this Congress. That was when we thought there was no way the country might actually default on its debts, sending a potential shockwave through the market. Well…way.

If the shutdown is a black eye on the Congress, allowing the country to default on its debt would be a beating that could leave both the Congress and the economy unrecognizable.

The broadcast and cable lobbies were not weighing in last week—not because there wasn’t plenty of behind-thescenes concern about their parochial interests, but because there is no political upside in ticking off Congress.

Broadcasters and cable operators are, like the rest of us, still on the mend from the economic hit of 2008- 09. If Republicans and Democrats can’t reach agreement on raising the debt ceiling, it could be disastrous for the economy. Some are arguing it would not be cataclysmic, but the U.S. has never been down that road before, so it is uncharted territory.

Count us with AT&T CEO Randall Stephenson, who warned the government against the folly of not striking a deal, and the president, who advised not to “take default out for a spin and see how she rides.” That would be playing a game of chicken with the economy. Even the threat could be damaging. In 2011, when there was only a threat of default, U.S. debt was downgraded for the first time.

Republican legislators are always accusing the government of taking actions that keep investment and innovation on the sidelines. But Congress’ inability to keep the government open—or at least guarantee it will pay its debts on time—are just the warning signals to Wall Street and Main Street that create a climate of fear.

The Center For Audit Quality last week said that, according to its survey of investors, if the country does default, it would reduce confidence in the capital markets to the lowest level ever.

So, attention Congress: This is not about who got us into this mess, but who is going to get us out. It will need to be the divided Congress coming together before everything else falls apart.