As both Steve Benen and Think Progress reported, Michael Steele's insistence that the Republicans are not going to be willing to compromise and approve another raise in the federal debt limit should have all of us worried about just how badly they are willing to damage our economy for the sake of political gain.
Fairly early on in the next Congress, lawmakers are going to have to approve yet another raise in the federal debt limit. At least, they should, if they hope to avoid an enormous catastrophe.
The problem, of course, is that quite a few far-right Republicans, especially those poised to win tomorrow, have no intention of doing what's necessary. Bruce Bartlett noted the other day that it's a disaster just waiting to happen.
I hope I am wrong, but I don't see any prospect of meaningful action by a Republican Congress that would reduce the deficit, and much reason to think it will get worse if they have their way by enacting massive new tax cuts while protecting Medicare from cuts. And as I have previously warned, I am very fearful that it will be impossible to raise the debt limit, which would bring about a default and real, honest-to-God bankruptcy -- something many Tea Party-types have openly called for in an insane belief that this will somehow or other impose fiscal discipline on out-of-control government spending without forcing them to vote either for spending cuts or tax increases.
When we talk about this crop of Republicans being absolutely stark raving mad, the debt-limit issue offers a terrific example. For years, responsible officials in both parties have recognized, particularly in times of war and/or economic crises, that extending the debt limit is a routine step necessary to keep America paying its bills. [...]
Just to be perfectly clear here, if Republicans retake the majority and block an effort to raise the debt limit, this tells the world that the United States isn't in a position to repay its debts. We're talking about an America in default. The practical effects could prove catastrophic to the global economy -- that's not hyperbole; that's just reality.
And from Think Progress -- Steele Sets Up Government Shutdown Debate: GOP ‘Not Going To Compromise On Raising The Debt Ceiling’:
Ahead of tomorrow’s elections, Republicans have been making clear they have no interest in working across the aisle with Democrats to govern the country, with Republican Conference Chairman Mike Pence (R-IN) vowing “no compromise” and Senate Minority Leader Mitch McConnell saying his first priority with a larger GOP caucus would be to beat President Obama in 2012. Appearing on CNN’s State of the Union yesterday, RNC Chairman Michael Steele echoed this obstructionist pledge. Particularly troubling, Steele told host Candy Crowly the GOP is “not going to compromise on raising the debt ceiling” — something that will almost certainly lead to a government shutdown and economic catastrophe. [...]
A report released last week by the Center for American Progress outlined the potentially devastating consequences of failing to raise the debt ceiling:
– Government Shutdown: The budgetary implications of failing to increase the debt ceiling would result in “the immediate cessation of more than 40 percent of all federal government activities (excluding only interest payments on the national debt), including Social Security, military operations in Iraq and Afghanistan, homeland security, Medicare, and unemployment insurance.”
– Default on the National Debt: During the previous GOP-induced debt ceiling crises in 1995-96, the Treasury Department used extraordinary measures to avoid defaulting on the national debt. Deutsche Bank analysts believe that those same measures would be less effective today and the government would “not be able to stave off a government shutdown (or possible suspension of bond payments) for long.”
– Worldwide Financial Panic: “Refusing to raise the debt ceiling would recklessly disrupt the sale and purchase of new Treasury bonds, and could potentially cause a run on outstanding Treasurys as well, as investors sought other investments. This could have catastrophic consequences for our economy as well as the economic stability of the rest of the world.”
– Economic Catastrophe: Suddenly pulling trillions of dollars in public spending out of the economy, as well as inducing a worldwide financial panic and a run on U.S. sovereign debt would “almost certainly result in a severe drop in economic growth and employment” and could potentially “take us into a Second Great Depression.”
– Actually Increase Long-Term Deficits and Debt: By undermining the credit worthiness of U.S. government, annual borrowing costs would skyrocket. A mere doubling of the current rate the government pays for a 10-year Treasury note would nearly double the cost of annual interest payments on the national debt to approximately $600 billion—increasing long-term deficits and fueling even more high-cost borrowing. If investors begin pricing a “fear premium” into U.S. debt, costs could be driven even higher.
Transcript from CNN:
CROWLEY: Joining me now for that answer, the chairman of the Republican National Committee, Chairman Michael Steele.
Thank you for joining us.
STEELE: It's great to be with you, Candy. Good morning.
CROWLEY: Let me start first with the majority leader of the Senate saying the single most important thing that Republicans want to achieve in the next two years is to make the president a one-term president. You've had the Republican leader on the House side saying this is -- no, we're not going to compromise, and you yourself had said that Republicans are not looking to compromise. Is that what you're taking away from the polls right now, that the American public doesn't want the Republicans to compromise on anything?
STEELE: Well, I think that, to be very clear here, when we talk about not compromising, not compromising away on the principles that our party have run on and have stood for, for a long time. For example, we're not going to compromise on creating more debt. We're not going to compromise on raising the debt ceiling. We're not going to compromise on increasing the burdens on the backs of small-business owners and families.
The administration has got to come to the table at some point, Candy, to deal with these issues. When we talked about health care, we put a series of agenda items on the table. We couldn't even getting a meeting with the White House to talk about those things. So you pass a health care reform without tort reform, which is a major dollar point that goes into the cost of health care.
These are the types...
STEELE: These are the types of things, on issues -- let me just make this point -- these are the types of things on issues that Republicans feel that the administration has not come to the table on. And with the Republican majority in the house, or Senate or hopefully both, we're not going to compromise on those things. We're going to stick to try to get that business done.
CROWLEY: Mr. Chairman, it just sounds like a recipe for gridlock. You know, you've got Republicans already talking about we're not going to -- we're not going to compromise on our principles, but the principles --you know, it's not like the president says, gee, I can't wait to run up the debt. That's not where the argument is.
The argument is about how do you stimulate jobs; how do you get people back to work? And you have to make choices there. And all we've really heard from Republicans is, you know what, no, we're not going to compromise; we're not going to compromise on...
STEELE: Well, no, I disagree with that, Candy. And while the president may not have said, oh, gee we're not going to -- we don't want to run up the debt, his actions have done that. And that has been the frustration and the anger that's been brewing out there for the past 18 months.
People have heard the rhetoric of change but they've seen that the total capitulation to government in implementing that change -- small-business owners, families and communities have been locked out of this process. You don't create the kind of jobs we need to stimulate this economy by going first to government. You go into the marketplace. And that's been the argument that's been made.
Number two, in terms of the policy issues, all you have to do is you want to get a sense of where we want to go in the economic front, look at what Paul Ryan has put out there; look what others have written and stated politically this is where we want to go.
CROWLEY: But Republicans can't have -- I mean, my point being the Republicans can't have everything they want.
STEELE: Well, sure.
CROWLEY: And the president, you know, clearly knows that he can't, if he's working with a more Republican Congress, regardless of what the numbers are going to be.
I want to show you something from a new CNN/Opinion Research Corporation poll that we're putting out today, it's about the Republican Party, people's opinion of the Republican Party: 44 percent of those asked had a favorable opinion; 43 percent had an unfavorable opinion. So really, they're not thinking the Republicans are so great here.
CROWLEY: Don't you have to be careful?
STEELE: Oh, yes and I'm glad -- Well, look, first thing, I'm glad to see it said 44, because, remember, a year ago we were in the low 20s. And so the party has made steady gains back -- back to engaging with the American people.
But your point is exactly the point. We do need to be very careful here. We do need to be very smart about the kind of leadership we bring to the table come January with a Republican majority in the House and hopefully the Senate. We do need to be very, very smart about what the American people are saying they want us to address in terms of the economy, jobs creation and the like.
You can't -- I agree you cannot just go and do the same old same old because, if you do, then you're going to wind up seeing such a split in the party, you're going to wind up seeing a lot of people take that support that that newly found support that they have for the party and place it elsewhere.
So the leadership has got to be very strategic and very smart about two things; one, how it continues to address the concerns that the people have while hopefully bringing the administration to the table to get something done.