"The chief consequence of the conservatives' unrelenting faith in the badness of government," Thomas Franks wrote three years ago in The Wrecking Crew, "is bad government." But would happen if virtually every article of that faith were wrong or, much worse, a blatant lie? Then you'd have something that looks very much like the crisis over the soon-to-be breached U.S. debt ceiling. After all, despite the dire warnings of impending doom from economists, the Federal Reserve, Wall Street ratings agencies, GOP-friendly business groups and even some of their leaders, many Republicans would sooner see the United States default and its recovery destroyed than follow the dictates of either national interest or reason. And it's all because the Republican prime directive - political power at any cost - trumps the truth.
Arizona's Jon Kyl, the second-ranking Senate Republican, gave the game away in April when his office declared his slander of Planned Parenthood was "not intended to be a factual statement." So it is for just about every GOP talking point. Tax cuts don't "pay for themselves." The GOP job creators didn't create jobs after the Bush tax cuts, though they did when their taxes were higher. There are neither "death panels" nor a "government takeover of health care" in the Affordable Care Act which, despite Republican myth-making, actually reduces the national debt over the next decade. Barack Obama isn't a Muslim, but he was born in the United States. Public employees are not overpaid and vote fraud does not threaten American democracy. Global warming isn't "the greatest hoax ever perpetrated on the American people." And we did not go to war in Iraq "because we were attacked."
Despicable and dangerous as these frauds are, they didn't threaten to destroy the American economy in a matter of days and with it, the global financial system.
On the same day last week, the U.S. Chamber of Commerce, Federal Reserve Chairman Ben Bernanke and Wall Street rating agencies joined the ever-louder chorus of voices warning Republicans that failure to raise the U.S. debt ceiling would result in "calamity." Those pleas followed a new analysis by the Bipartisan Policy Center concluded that failure to boost the debt ceiling by the August drop-dead window would force the U.S. Treasury to immediately slash spending by 44%. As The Hill reported, "On an annualized basis, the cut in spending alone is a 10 percent cut in GDP, BPC scholar Jay Powell told reporters." The IMF similarly cautioned that "the debt ceiling should be raised as soon as possible to avoid damage to the economy and world financial markets." 235 economists - including six Nobel Prize winners - signed an open letter to Congressional leaders urging them to raise the ceiling, and to do so "without attaching drastic and potentially dangerous reductions in federal spending." Failure to do so, they warned, "could push the United States back into recession." So it came as no surprise when Treasury Secretary Tim Geithner declared on Thursday, "We're running out of time" to avoid what Ezra Klein deemed the "catastrophic calculations" of default.
But Republicans don't need to take Geithner's word for it. They can heed the words of their party bosses.
In their few moments of candor, GOP leaders expressed agreement with Tim Geithner's assessment that default by the U.S. "would have a catastrophic economic impact that would be felt by every American." The specter of a global financial cataclysm has been described as resulting in "severe harm" (McCain economic adviser Mark Zandi), "financial collapse and calamity throughout the world" (Senator Lindsey Graham) and "you can't not raise the debt ceiling" (House Budget Committee Chairman Paul Ryan). In January, even Speaker John Boehner acknowledged as much:
"That would be a financial disaster, not only for our country but for the worldwide economy. Remember, the American people on Election Day said, 'we want to cut spending and we want to create jobs.' And you can't create jobs if you default on the federal debt."
Nevertheless, eight month after he warned his new GOP House majority that "we're going to have to deal with it as adults" and three months after he told a Tea Party gathering that "we're going to have to raise it again in the future," Speaker Boehner this week acknowledged that at least 60 GOP Congressmen "won't vote to raise the debt ceiling under any circumstances."
Boehner's head count doesn't begin to do justice to the Republican fiscal recklessness bordering on dementia.
For months, Republican presidential candidates Michele Bachmann and Tim Pawlenty led the default denier chorus. While Mitt Romney joined Rick Santorum, Newt Gingrich and Ron Paul in supporting the "Cut, Cap and Balance" Pledge which demands a balanced budget amendment and draconian spending cuts as conditions of raising the debt ceiling. This week, the House and Senate will vote on their respective versions of the Cut, Cap and Balance Act, which among other things would require supermajorities to raise taxes or breach a federal spending cap targeted at 18% of U.S. gross domestic product.
As it turns out, outlays by the federal government haven't been as low as 18% of GDP since 1966. (That's why the Simpson-Bowles Commission created by President Obama and opposed by Senate Republicans set a 21% target.) As it turns out, the 98% of Republicans in Congress voted for Paul Ryan's budget plan would fail their own Cut, Cap and Balance test. As Ezra Klein explained in April:
House Republicans voted to make the Ryan budget law. But the Ryan budget includes $6 trillion in new debt over the next 10 years, which means that to become law, the Ryan budget would require a substantial increase in the debt ceiling. But before the Republicans agree to increase the debt ceiling so that the budget they passed can become law, Republicans are demanding the passage of either a balanced budget amendment that would make the Ryan budget unconstitutional or a spending cap that the Ryan budget would, in certain years (and if you're using more realistic numbers, in all years), exceed.
Nevertheless, House Republicans, pressured by Tea Party zealots, have been digging in their heels. This week, Congressmen Louie Gohmert (R-TX) and Steve King (R-IA) joined Bachmann in calling the Obama administration's warnings about the August 2 deadline lies. (Not to be outdone, Sarah Palin, who previously blasted "Timothy Geithner's false statements to the American people," tweeted "Obama lies, economy dies.") Georgia Rep. Paul Broun called for the debt ceiling to be lowered to $13 trillion, would necessitate immediately cutting roughly three-fourths of all federal spending. And while Arkansas Rep. Eric "Rick" Crawford announced that a default "wouldn't work for just a few days, that would work for a few years," his freshman colleague Mo Brooks (R-AL) insisted no debt ceiling increase, no problem. As the Washington Post reported:
"There should be no default on August 2," Brooks said. "In fact, our credit rating should be improved by not raising the debt ceiling."
That stands in contrast to a warning from Moody's. The rating agency said Wednesday that it might downgrade the U.S. government's top-notch credit rating, "given the rising possibility that the statutory debt limit will not be raised on a timely basis, leading to a default."
"The people who are threatening not to pass the debt ceiling are our version of al Qaeda terrorists. Really. They're really putting our whole society at risk by threatening to round up 50 percent of the members of the Congress, who are loony, who would put our credit at risk."