Republicans have shut down much of the federal government to coerce a policy change they couldn’t win in the previous presidential election, from a Supreme Court decision or from votes in Congress.
Many of them have dismissed the impact of shutting down the government, even as hundreds of thousands of employees are furloughed, health and safety rules go unenforced and cancer patients are unable to access clinical trials.
Just when you thought their game of chicken couldn’t get any more reckless, some Republicans in both the House and Senate are dismissing the economic harm that could be caused by the United States hitting its debt limit, and potentially defaulting.
Are they delusional?
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Or are they so wedded to their suicidal strategy that they are choosing to ignore signals from Wall Street, foreign leaders and financial analysts who warn that a default could be disastrous for an economy that is hobbling out of a recession?
As The New York Times reported Wednesday, a panel of 36 economic experts was recently queried by the Initiative on Global Markets, an arm of the Booth School of Business at the University of Chicago, about the impact of a default. These experts were asked to respond to this statement: “If the United States fails to make scheduled interest or principal payments on government debt securities, even as an unintended consequence of political brinkmanship, U.S. families and businesses are likely to suffer severe economic harm.”
A third of the experts queried “strongly agreed” with the statement; 42 percent agreed; 6 percent were uncertain; and a mere 3 percent disagreed.
Republicans claim the nation can avoid a default even if Congress fails to increase the debt limit. Sen. Richard Burr, a Republican from North Carolina, says the money saved by having the government shut down could be used to make debt payments, avoiding a default.
“We always have enough money to pay our debt service,” Burr told the Times.
Numerous analysts agree the U.S. treasury has the means to avoid a default if Congress fails to increase the debt limit within a week’s time. But to do so, the treasury would have to hoard tax money to make payments on the nation’s debt, taking that money from programs and services that help keep the economy afloat. Some peg the figure at $175 billion in November alone that would be shifted from government spending to debt payments.
“The cutting would be so huge it would put the U.S. back into recession,” said Jim O’Neill, former chairman of Goldman Sachs Asset Management, who is now a Bloomberg View columnist.
The Republicans who orchestrated this showdown have never had a close association with the facts. But now their falsehoods are making some people believe the economy will go unharmed if the debt ceiling isn’t raised. It’s a dangerous, cynical, delusional ploy.