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Rep. Joe Walsh's weird, bullying, argumentative appearance on Hardball left me a little confused. Actually, Joe Walsh confuses me, and I'm thinking that's probably intentional. In addition to his, um, spirited defense of the odious cut, cap, mangle bill that passed yesterday, he is pimping a letter to his colleagues encouraging them not, under any circumstances to take the McConnell deal.
Freshman Illinois Rep. Joe Walsh circulated a letter he said was signed by roughly 50 members asking the House GOP leadership to “publicly disavow” the last-ditch debt-limit proposal pitched by Senate Republican leader Mitch McConnell, vowing not to bring it up for a floor vote “in any form.”
So, C&L readers, riddle me this, assuming the following facts:
- Wall Street does not gain anything from a US Bond default. In fact, it will send markets into the tank yet again. While it's true that bear markets are a time to pick up some bargains, it's equally true that if the US defaults, we're going to be looking for bargain bread heels, not stocks.
- Business does not gain anything from a US Bond default. If our bonds are downgraded, interest rates go up, US Treasury bonds become higher-risk investments, rocking the entire bond market. Business won't be exempt. Their rates go up.
- Rep. Walsh and those others he's gathering signatures from were heavily funded by Wall Street and still are. Walsh took in a haul in June, much of it from the financial services industry. Paul Ryan is one of their darlings, along with Eric Cantor, John Boehner and Spencer Bacchus. Tea Party candidates weren't exempt, either. Michelle Bachmann, Louie Gohmert, and Paul Broun all received sizable contributions from the financial sector
With that in mind, what incentive is there for these TeaBirchers to turn on Wall Street? Or flipping the question, what benefit to Wall Street is there in having rogue politicians that they're funding as recently as June 30th threatening to blow up the US economy?
This is the question I've been struggling to answer, and it seems to be one I haven't seen asked in the mainstream. While everyone is calling the horserace and wondering whether Obama will wreck Social Security, Medicare and the like, no one is asking why on earth Congressmen who Wall Street helped elect would seemingly be biting their master on the ass.
Here are a couple of thoughts I had, but take them for what they are, just thoughts. I'd be interested to hear what yours are on it.
Fulfilling Grover Norquist's ideal of killing government entirely
There are two things investors consider when buying government bonds. They are essentially making two bets. One bet is on the government’s ability to pay that debt within the maturity of the bond, so whether it is 10 or 30 years, investors are betting that the government will make good on its promise to service its debt and pay it in full throughout the life of the bond. The second bet is political. Investors are hoping that the government doesn’t suddenly change its political and economic system entirely and, as a result, opt out on paying bondholders. When it comes to the US, investors know they are investing in a political system that will remain sound. In Greece, they are buying bonds at a steep discount and speculating that the 50 they paid will one day be worth 65. Political risk has never been in play in the US. Until now.
Is it possible that this is actually an intentional effort to make the US government appear to be unstable, or to destabilize confidence in the US government in order to kill it, a la Norquist's dream? If it is, then we also have to consider the consequences of such an action from a political standpoint, which would be a scenario where, after destabilizing everything, Republicans claim to be the only ones who can re-stabilize it.
That was a favorite strategy of Jack Abramoff's after all. Lobby to kill one tribe's casino so they could get paid by that tribe to reinstate it.
This strategy could also play into the dominionists' rise in the form of Rick Perry and Michele Bachmann, who claim to be God-called to 'save the United States.'
Outright bald, naked, out of control hate for Barack Obama
After all, we do have McConnell claiming their number one goal is to defeat Obama in 2012. Is it really possible they could tank the entire economy for the sole purpose of gaining politically? And if so, it would appear to be backfiring on them in a big way, given the amount of political capital they've spent and lost in this battle.
Or maybe, it's just "how the hell did I get boxed into this corner?"
Here’s how this may play out: The House passes “cut cap and balance” today, it fails in the Senate over the weekend; and by Monday everyone finally realizes that there’s no way the White House and Congressional leaders will ever reach a deal exchanging spending cuts for revenue hikes. At that point, the aide predicts, everyone may throw up their arms and say, “what now?” It’s only then that House Republicans — who got their chance to vote Yes on spending caps and a balanced budget amendment — will realize that they have no choice but to pass the McConnell proposal.
The McConnell proposal is, in my mind, the very worst outcome other than default because (repeat after me) there will be no deal. What needs to happen, and what should happen, is that Republicans peel off their 60 rebellious freshman teenagers, join with Democrats and pass the damn debt ceiling increase clean and pretty.
Here's one more factor to consider. Some of these vocal freshmen (like Walsh) are about to be redistricted out of office. That makes me wonder if Walsh is just the mouthpiece for what will, in the end, be a losing proposition but serves as a distraction to try and get Democrats and the President to cave.
It bothers me that wingnuts like Walsh are given this kind of time on cable TV without asking these questions. It bothers me that Walsh is still receiving so many Wall Street donations while playing the "blow the whole thing up" game. It bothers me that he and Pat Toomey are both Club for Growth Republicans and threatening to blow it up. It makes me feel like there's more to the strategy than has been discussed. So start discussing. :)