Who has the power in the debt ceiling talks?

The law capping how much debt the United States may incur, a law created when the government was raising money to fight World War One, has created an artificial crisis that all sides are using to try to finally do something about a very real problem, the increasing pace of the growth of U.S. debt.

The timing is bad. The federal government is a player in the private sector economy and it would help if the government actually did some extra spending instead of cutting back. For example, the New York Times reports that Washington plans to close hundreds of federal data centers, which will lead to the loss of tens of thousands of jobs.

But the government would have to get this under control eventually, and the election of Tea Party freshmen to Congress means the votes are there to take tough action. The Tea Party freshmen are frustrating even the Republican leadership because they're not reasonable; they campaigned on draconian pledges and they're sticking to them. But it's this very unreasonable quality that has made it possible for them to create this crisis that will achieve spending cuts that would probably have been necessary later in any case. In other words, the people who are making this so messy and stressful and the same ones who made it possible to get something done.

So who has the whip hand now?

Not President Obama, who has been so villified in conservative viral media that some Americans will oppose anything he supports out of an excess of bile. Not Congressional Republican leaders, who can't control the Tea Partiers. Not Congressional Democratic leaders, who can't control the AARP in its campaign to rouse seniors to smite anyone who touches Social Security and Medicare.

Two groups have the power. One is the Tea Partiers, of course. But the other group is one that has no seat at the table, and indeed isn't even in Washington, D.C.

It's the three credit rating agencies - Standard & Poor's, Moody's, and Fitch - the three agencies that have the power to lower the U.S. bond rating, an act that would immediately force the Treasury to offer higher interest rate returns on its T-bills, raising substantially the cost of constantly refinancing the U.S. debt, and increasing rather than decreasing the deficit.

All three agencies have warned more than once that they are indeed prepared to lower the U.S. credit rating, and there is nothing Congress or the White House can do to stop them. In fact, the only thing that might - might - lessen the blow of a credit rating downgrade would be in the European debt crisis was so bad that T-bills were still safe investments in comparative terms. But most T-bills are sold to foreign investors, and no amount of jawboning in American media will induce them to keep buying T-bills if the feeling in their own country is that they should be, say, buying gold instead.

The Treasury Department calculates that Aug. 2 is the drop-dead date for a debt reduction deal that includes an increase to the debt ceiling. Some people think it's not so final as that because the president could continue meeting debt obligations by shutting down national parks or otherwise interrupting expensive government services. He'd have to, actually; the Constitution specifies that debt service gets paid first. But it doesn't matter. The credit rating agencies are not constrained by the government to evaluate the U.S. bond rating solely on whether debt obligations are met. The are within their rights, and indeed obligated, to lower the U.S. credit rating if they honestly feel the risk has risen, even if they base that judgment on people not being able to visit Yellowstone.

The Tea Partiers can make President Obama bow to their power. But they can't make Standard & Poor's affirm an excellent U.S. credit rating. The hour is approaching when these freshmen, who came to the Capitol full of disdain for their seniors and for the chief executive, will have to decide whether they really want to accomplish something or whether they would rather be the actual cause of the federal debt going up even faster. In their simple-minded zeal, they have accomplished much, and good for them; but they could also screw things up worse than before.