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Since 2008 – Progress Through Politics

Debt Crisis Stupidity

Republicans are playing chicken with American prosperity.  The stakes could not be higher.  Most Americans see this as another pawn in the endless jostling between politic factions, but it is not.  It stands to reverse the expensive and tentative recovery which we are only beginning to enjoy and throw the American economy into a crisis similar to that of Greece relative to the European Community:

May 14 (Bloomberg) — U.S. Treasury Secretary Timothy F. Geithner said a default arising from failing to raise the debt limit could cause “irrevocable damage” to the economy, risk a “double-dip” recession and increase unemployment.

“Default would not only increase borrowing costs for the federal government, but also for families, businesses and local governments — reducing investment and job creation throughout the economy,” Geithner said in a letter dated yesterday to Senator Michael Bennet, a Colorado Democrat.

Failing to raise the $14.29 trillion debt ceiling would “force the United States to default” on obligations such as payments to service members, citizens, investors and businesses, Geithner wrote. “This would be an unprecedented event in American history. A default would inflict catastrophic, far-reaching damage on our nation’s economy, significantly reducing growth and increasing unemployment.”

Ian Katz and Daniel Enoch – Geithner Says Damage From Debt Default May Be ‘Irrevocable’ Bloomberg 14 May 11

Republicans seem intent to use this opportunity for a Norquist-style drowning of the economy, which they can then blame on the incumbent administration in the run-up to a desperate presidential election cycle.  Is this the party of patriots or economic suicide-bombers?

The rhetoric of Congressional Republicans seems no better than that of drunken adolescents on a country road late at night:

U.S. Senator Marco Rubio, a Florida Republican, has said he won’t approve a debt-limit increase without a range of tax-and- spending reforms.

“We need to use the debt limit itself as the way to ensure that America’s debt limit begins to decline, not always go up,” Rubio said in a March 29 television interview with Fox News. “How about the debt limit starting to go down? These are the kinds of things that I hope we’ll focus on.”

Rebecca Christie and Dawn Kopecki – Jamie Dimon Says Debt Default by U.S. Would Be ‘Catastrophic’ Bloomberg 31 March 11

Believe me folks, this is serious.  We are like hostages on a bus with a bunch of ideologically motivated suicide-bombers disguised as the Republican party.  The Chamber of Commerce as hostage negotiator:

The U.S. Chamber of Commerce waded into the fight over increasing the government’s borrowing limit on Friday by urging members of Congress to raise the debt ceiling “as expeditiously as possible.”

The business community’s chief lobby in Washington made the case in a letter to lawmakers signed by Bruce Josten, the group’s head of government affairs, arguing that failure to pass legislation authorizing an increase in borrowing by Aug. 4 “would create uncertainty and fear, and threaten the credit rating of the United States.”

Patrick O’Connor – Chamber Urges Lawmakers to Raise Debt Limit ‘Expeditiously’ WSJ 13 May 11

Even Right hawks like Charles Krauthammer have gone on record, “You can’t not pass it. It is catastrophic. It means American debt is in question. It can’t happen…”  And yet we are playing this game.  At times like this is it worth looking at the ructions created between the Republican Congressional cohort and their better angels:

Default would be the single most irresponsible thing the United States of America could possibly do. America’s debt has been paid in full and on time since 1789. To cast away that record even in a genuine financial emergency would be a terrifying action. To cast away that record to score a political point? Reckless almost beyond description.

I always assumed that the first American political party to contemplate default as a way to achieve its political goals would be the Communist Party of the USA, not the GOP. I’m going to tell myself that it’s all just a bluff, and that Boehner is talking wild as a prelude to lowering the boom on the Tea Party. But wild talk has a way of generating its own momentum – and leading to wild results.

The GOP wants to push for a budget deal? That would be welcome.

But what this default talk looks like is that the GOP wants a crisis, not a deal. A deal would involve real pain for real voters: Medicare reductions, farm spending reductions, military reductions, and revenue measures. A crisis creates an exciting substitute for such a deal – especially if the GOP can temporarily and delusively convince itself that it can pin the blame for the crisis on President Obama. That will not be true.

David Frum – Stop Flirting with Debt Disaster Frum Forum 14 May 11

Well said.  So we’ve been cowering from terrorism all these years only to find the same motivations right here at home.  Burn down the house for an ideological virtue of dubious worth.  God save us from the Republicans on this Quixotic and self-destructive mission.  They created this crisis, right?  Well for pity’s sake let’s keep their hands off our economy until we get it back to rights.


  1. DTOzone

    They know they have the upper hand because of public opinion. Either there’s a public misconception as to what effect not raising the debt ceiling would have, or maybe the public knows and don’t care because they think it can be easily fixed by cutting whatever it is in the budget they don’t like.

  2. HappyinVT

    What happens now?  Will it take service members not getting paid?  Or government employees being furloughed?  Hell, I’ve lost track, is Congress even in session or have they started the Memorial Day break?

    (I get VA checks each month that I count on ~ will I get one June 1st?)

  3. HappyinVT

    Compared to the Boehner who talked tough on spending ahead of last November’s elections, the one who showed up at Club 55, just off Interstate 75 in Troy in southwestern Ohio, struck them as timid.

    The private April 25 meeting was convened by the Speaker of the House of Representatives at the request of Tea Party leaders, who were seething over recent Republican compromises, most notably on the 2011 budget.

    One of the 25 or so leaders, all from Boehner’s district, asked him if Republicans would raise America’s $14.3 trillion debt limit.


    “And we’re going to have to raise it again in the future,” he added. With the mass retirement of America’s Baby Boomers, he explained, it would take 20 years to balance the U.S. budget and 30 years after that to erase the nation’s huge fiscal deficit.


    “You could have knocked me out of my chair,” said Denise Robertson, a computer programer who belongs to the Preble County Liberty Group. “Fifty years?”

    She said “my fantasy now” is someone will challenge Boehner in the 2012 Republican primaries. “If we could find someone good to run against him, I’d campaign for them every day,” Robertson said.…  

    I agree with Ms. Robertson on one thing ~ we’re both sick of the tears.

  4. Shaun Appleby

    Tea Party economic policy:

    Dennis Ross, a House Republican and a member of the Tea Party caucus, told Reuters: “I don’t think Treasury has been up front with us. I am not convinced the sky will fall in on August 3.”

    Ross added: “I’m not an economist, but I have maintained a household. The federal government owns 70 per cent of Utah, for example. There are federal buildings. If you need cash, let’s start liquidating.”

    Tim Reid and Rachelle Younglai – Skepticism grows on Geithner’s US debt limit deadline Reuters 17 May 11

    I’m not an economist either but that sounds like eating your tail.  I’m not quite as confident as others that this is going to turn out well, though discomfort among Republicans seems assured.

  5. HappyinVT

    Thank you, janicket, for the heads-up on p m carpenter:

    Earlier today I heard an MSNBC correspondent describe Paul Ryan as a “wonky guy.” The occasion for this media resume-inflation was Ryan’s abjuring of a Senate run — the implication being that he’s actually much happier dipping into the House’s murky policy bowels rather than replacing his lowly status of “Rep.” with the more distinguished title of “Sen.”

    Nonsense. Ryan is an ideologue — the furthest thing from a genuine wonk. He knows advisable policy before ever applying one shred of phony research — cooked up by some Norquistian imbecile at the Heritage Foundation — to his preconceived ideas. His budget proposal, as just one horrifying example, was a symphony to plutocracy and an insult to human decency. But by God it expunged at least one socialist evil. And that’s all Ryan cared about.  

  6. HappyinVT

    Why is it, in our supposedly center-right country, conservatives seeking to dismantle the welfare state need to pretend they’re actually preserving it? I thought the American people were just a bunch of rugged individualists seeking to free themselves from the yoke of government assistance thrust on them by crypto-fascist liberals. Apparently it’s not that simple.…  

  7. HappyinVT

    the “love,” too:

    At a town hall in Anthem last night, [Ben] Quayle was asked by a constituent why he had pushed to cut services for the elderly and women while pushing massive tax cuts for the rich and tax subsidies for the oil industry. In a condescending manner, Quayle demanded that the constituent name the specific subsidies targeted towards oil companies. The constituent didn’t miss a beat, and reminded him that the Senate just last week held a hearing where oil industry CEOs defended billions in special taxpayer money. Quayle then went on to deny that any of the subsidies used by the oil industry are at all targeted:

       CONSTITUENT: I’d like to know why you’d like to do this on the backs of seniors, and of women. All the cuts are going to hurt seniors, future seniors, and women! Your attacks on Planned Parenthood are hurting women who need healthcare. […] And why are you are choosing that way rather than cutting oil subsidies […]

       QUAYLE: In terms of the oil subsidies, if we’re going to address it, can you just tell me what oil subsidies you’re talking about so I could have better information on what to expand on it?

       CONSTITUENT: Why were the oil companies coming to defend their subsidies in front of the Senate? Those subsidies, anything in which we give them money when they’re making billions off of us every day.

       AUDIENCE: That’s right!

       QUAYLE: The things they were talking about were actually tax deductions that corporations across all sorts of sectors take in terms of R&D, in terms of equipment deductions, the life of the equipment, those were the deductions that they were talking about and it’s not specific to the oil industry […]

    The audience was not buying was Quayle was selling.

    But wait, there’s more:

    Saying she wanted to “share with you what I walked into” when she entered Congress, she spent the first 40 minutes of the 75-minute session on a power-point presentation with graphs and pie charts that showed the projected increase in Medicare spending by 2020, the breakdown of discretionary and nondiscretionary federal spending, and the increase in the amount of U.S. debt owed to foreign governments.

    “My first priority is to preserve and protect Medicare for the present generation and for future generations,” she said. But when she insisted that the Republican budget blueprint for 2012 “protects Medicare,” a chorus of boos and catcalls and shouts of “liar” erupted in the auditorium.

    Unfazed, she repeated her argument that the budget blueprint written by House Budget Committee Chairman Paul Ryan, R-Wis., which would convert Medicare to a voucher program and let seniors use the vouchers to buy insurance on the private market, actually ensures that Medicare will be there for future generations.

    She compared the Ryan plan to the health care coverage members of Congress receive. ‘You get to choose your plan. It’s really that simple,” she said.

    But the audience was openly skeptical.


    When it came time for questions, a Vancouver man who identified himself as Scott won a standing ovation when he said, “We didn’t have a deficit in 2000, but since then we’ve had two wars and tax cuts. If we end the wars and roll back the tax cuts,” that would solve the nation’s budget crisis, he said.

    And my personal fave:

    A man who identified himself as Dave asked her to stop confusing the need to raise the debt ceiling with her own political agenda of cutting federal spending. Those are two different things, he said.

    “The debt ceiling is telling creditors, ‘Yes, we know we owe you money, and we will pay our bill,'” he said.

  8. jsfox

    quote on default –

    What happens if we crash into the debt ceiling? Nobody really knows, but it’s not likely to be pretty. Inflows and outflows of cash to and from the Treasury jump around from day to day as bills are paid and revenues arrive. But at average fiscal 2011 rates, receipts cover only about 60% of expenditures. So if we hit the borrowing wall traveling at full speed, the U.S. government’s total outlays-a complex amalgam that includes everything from Social Security benefits to soldiers’ pay to interest on the national debt-will have to drop by about 40% immediately.

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