DeMint, a de-facto leader of Senate conservatives and many Tea Party senators, called for an all-out battle early this year, when Congress will face a tough vote to legally authorize the government to take on more debt. “I think we should resist that. We need to have a showdown, at this point, that we’re not going to increase our debt ceiling anymore. We are going to cut things necessary to stay within the current levels, which is over $14 trillion,” DeMint told the conservative magazine Human Events in an interview released Monday. “So this needs to be a big showdown.” – The Hill
Well that didn’t take long. Even before the new House is gaveled to order by Speaker Boehner, the Democrats are all ready setting themselves up. Or maybe this is really just bipartisan kabuki aided by a willing media who is too stupid or complicit to report that the American public are being played by a bunch of politicians waiting for the inevitable blink.
The national debt topping $14 trillion dollars sets the scene.
First we had Austan Goolsbee on ABC’s “This Week,” who was characterized as “throwing down the gauntlet” over the debt ceiling. Via Sam Stein:
“Well, look, it pains me that we would even be talking about this,” he told co-host Jake Tapper. “This is not a game. You know, the debt ceiling is not something to toy with. If we hit the debt ceiling, that’s essentially defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic. That would be a worse financial economic crisis than anything we saw in 2008.”
“As I say that’s not a game,” Goolsbee went on. “I don’t see why anybody’s talking about playing chicken with the debt ceiling. If we get to the point where you’ve damaged the full faith and credit of the United States, that would be the first default in history caused purely by insanity. There would be no reason for us to default other than that would be some kind of game. We shouldn’t even be discussing that. People will get the wrong idea. The United States is not in danger of default. We do not have problems with that. This would be lumping us in with a series of countries throughout history that I don’t think we would want to be lumped in with.”
This is not a game? Who’s he kidding, that’s exactly what this is.
Goolsbee has already signaled the White House is at the very least pretending to be freaked out over the Right’s default threat, with the Tea Party legislators offering their Republican colleagues plenty of cover. The Right also allows the White House to lay the ground work that The Republicans Made Them Do It, that is, make spending cuts, perhaps even including Social Security, because Pres. Obama couldn’t possibly let the U.S. default. It’s just not what Serious People do.
As if the Right had planned their tag team, Graham decided to use DeMint’s Tea Party cover to throw down his own Goolsbee-esque gauntlet. From “Meet the Press” this past Sunday:
SEN. GRAHAM: Right. Well, to not raise the debt ceiling could be a default of the United States’ bond and Treasury obligations. That would be very bad for, for the position of the United States in the world at large. But this is an opportunity to make sure the government is changing its spending ways. I will not vote for the debt ceiling increase until I see a plan in place that will deal with our long-term debt obligations, starting with Social Security, a real bipartisan effort to make sure that Social Security stays solvent, adjusting the age, looking at means tests for benefits. On the spending side, I’m not going to vote for debt ceiling increase unless we go back to 2008 spending levels, cutting discretionary spending.
The Left is making fun of Mr. Graham, scoffing at his mantle of being a more reasonable conservative, with his remarks above proof he isn’t. However, as the Right goes he actually is. But considering Democrats and Pres. Obama have proven to be the worst negotiators in modern political history, why not climb out on the Tea Party limb? Looks pretty sturdy to me.
Pres. Obama’s deficit commission already came down with recommendations for Social Security, which were baked into the cake when he chose the people on his panel. So, as we saw on Pres. Obama and the Democrats’ capitulation on extending the Bush tax cuts, it’s not as if they haven’t already signaled that it’s time for Social Security for future generations to be rethought, while setting a precedent that compromise is king.
But Republicans defaulting on the debt ceiling to get what they want in cuts or changes on entitlements? Consider the real ramifications, not the gamesmanship.
Dean Baker has already written about the realities, which way too many people are ignoring in favor of conventional hysteria ignorance.
… the gun, in the form of a potential debt default, is actually pointed at the Wall Street banks, not the public.
A debt default would be a very bad situation and one that we absolutely should try to avoid. But the day after the default, the country would still have the same capital stock and infrastructure, the same skilled labor force and the same technical knowledge as it did the day before the default. In other words, the ability of our economy to produce more than $15 trillion in goods and services each year will not have been affected.
One thing that would not be around the day after a default is Wall Street. The default would wipe out the value of the assets of the Wall Street banks, sending Goldman Sachs, Citigroup, and the rest into bankruptcy. The recovery for the economy from such a situation will be difficult, but the shareholders of the Wall Street banks would be wiped out and their top executives unemployed.
For this reason, the threat of a default is a gun pointed most directly at Wall Street. Given the power of Wall Street over Congress, it is inconceivable that they would ever let the Republicans pull the trigger.
Noted conservative Bruce Bartlett is completely freaked about the Tea Party crowd in Congress doing the unthinkable. But it’s not the debt ceiling he’s worried about. It’s Wall Street.
I’m not trying to be flip, because the debt ceiling is serious business, but come on.
We know that Pres. Obama and every member of the big two parties who walk around in Congress are always concerned about and regularly cater to Wall Street. Can you imagine Pres. Obama allowing America’s bankers to get wiped out? Late yesterday Bloomberg reported that JP Morgan Chase & Co. big shot Bill Daley, Pres. Bill Clinton’s former Commerce Sect. (and NAFTA champion) was being considered for chief of staff.
Who’s kidding whom?
Obama and the Democrats have already signaled they’ll blink when Republicans push back; though if I thought these people were smart I’d say the tax cut cave-in was simply a precursor, a foreshadowing of a bigger kabuki battle on the debt ceiling so Obama could get cover on what he wants to do anyway.
You can bet Sen. DeMint and Lindsay Graham got the message from Obama and the Democrats extending the Bush tax cuts.
A deal to keep from defaulting seems to be laying itself out early, with the smoke signals between Goolsbie, Graham and DeMint offering a rhetorical road map if nothing else. It’s all a matter of how big the compromises could be, but also how far Democrats will go down this road before drawing a line.
Nobody’s going to kill Wall Street. It’s the congressional teat filled with America’s milk, which is obviously money. It also happens to make the world go ’round. Ceding to Republicans to cut anything substantial is giving in yet again to Republican threats that won’t be delivered upon.
The preferred reaction to all the talk would have been to just shrug it off and call the Tea Party Republican crowd’s bluff. Mr. Goolsbie instead showing up on “This Week” taunting Republicans instead of gauntlet throwing, saber rattling, yada yada yada, yawn. Let the American people get a sense of what drowning the U.S. in the bathtub looks like up close. CNBC would certainly be entertaining to watch, while Fox biz would blow a fuse. It would certainly tee up midterm election buyer’s remorse. But alas and again, nobody’s going to kill Wall Street.
Unfortunately, with both parties believing Independents would love hearing about “entitlement reform,” the stage is perfectly set.
Let’s not be fooled though, because no matter how loud Republicans squeal they will blink, which the White House knows. So, if Pres. Obama does bite on discretionary spending, or serves up entitlement cuts or Social Security changes, it won’t be because of Republicans. It will be by design and choice.
This essay was originally posted at 6:00 a.m.