House Republicans Make Their Regularly Scheduled Threat To Destroy The Global Economy
House Republicans will huddle at their annual retreat next week to decide what will they demand in exchange for raising the debt ceiling.
If the limit on how much the government can borrow to pay off debts Congress has already voted to incur is not raised by late February, the U.S. will default purposely for the first time in American history, triggering a financial crisis that many experts feel would be at least as devastating as the economic meltdown of 2008, which put millions out of work and destroyed trillions in wealth.
The government shutdown in October dominated the discussion during the weeks leading up to the last debt limit crisis. Republicans released a comical list of demands. The White House offered nothing, and that’s essentially what Republicans accepted when they folded on the government shutdown.
Earlier in 2013, Republicans demanded that the Senate pass a budget in exchange for raising the debt limit. The Senate agreed and House Republicans followed the strategy of Senator Ted Cruz (R-TX) and refused to go into conference with Democrats in the upper house — 18 times. And that’s how we got the shutdown.
Of course, you only have to feed a stray once to keep it scratching at the door. In 2011, House Republicans successfully used the debt limit to extract the automatic cuts known as the sequester, while triggering a near-panic that erased some 1,200 points from the Dow. Because the House has folded twice since then, Wall Street now takes the GOP’s threats as seriously as a Sarah Palin presidential bid, even when America was just hours from a default in October.
House Speaker John Boehner (R-OH) seems to have taken the reins of his caucus after the shutdown disaster and has since passed a two-year budget with little drama over the objections of the outside groups that backed Cruz last year. But the man who negotiated that deal — Rep. Paul Ryan (R-WI) — was one of the driving forces behind the 2011 crisis and is saying the House will demand something in exchange for raising the debt limit. The chairman of the Budget Committee has keyed in on the so-called “Obamacare Bailout,” which not a bailout at all, but a complex set of mostly deficit-neutral mechanisms that could help insurers if they are forced to take on too many sick customers, or could help cut the deficit if they don’t.
The problem for the GOP is the same mechanism exists in Medicare Part D, which was signed into law by George W. Bush and passed by Republicans — including Paul Ryan.
Still, Republicans plan to dare the president to default “to preserve a massive bailout for insurance companies” knowing that what they’re saying is “one enormous lie.”
Will Republicans give in when they recognize that the president will not cave to their demands, as he has vowed not to over and over again?
New York magazine’s Jonathan Chait believes they will.
Chait — who called the last debt ceiling standoff a domestic “Cuban Missile Crisis,” which the president won — notes that the House GOP’s argument has devolved from sanctimonious prattle about the debt to a straight-up demand for scattershot “concessions,” which only makes sense if they want to destroy the economy and need some incentive not to do so.
“But you can only try this bluff once,” Chait wrote. “The only way it could still work would be if Obama either paid a ransom or Republicans shot the hostage. Once the mark knows you’re bluffing, it’s over. You can’t do it again. Nobody is falling for this.”
The GOP’s debt scaremongering made a little sense in 2010 when the deficit was over $1 trillion and the long-term debt projections were skyrocketing — though threatening default increased the deficit and an actual default would have exploded it astronomically. But the deficit has been cut in half, mostly thanks to the end of some of the Bush tax breaks for the rich, and any threat of a long-term debt “crisis” may be disappearing, thanks to Obamacare.
Now the GOP’s theatrics just play into the notion that they blind obstructionists. And if they go too far, they could actually blow the 2014 elections.
Speaker Boehner needs his bluff to be taken seriously by only one constituency — a majority of his caucus.
The 50-70 members of the “suicide caucus” who are more aligned with outside conservative groups than the Speaker are already furious about the budget deal. They’re plotting a rebellion over piecemeal immigration reform that Boehner is preparing to take up, and they’re even planning on joining a retreat organized by Heritage Action that will immediately follow the one being held by leadership.
Boehner has to appear that he’s willing to default up until the exact moment when the pressure from the business community forces him to cave. And hopefully then there will be enough Republicans behind him when he does, so he can prevent a needless catastrophe at the last possible moment.
Photo: Gage Skidmore via Flickr