Look, I’m not saying Democrats are blameless. I think any Democrat that actually values their country above their damn party could have made this easier for Boehner. But there’s no way to spin this: with control of one-half of one-half of one-third of government, a faction of the GOP is determined that the debt ceiling not be raised. You need bi-partisanship of some sort to stop them: either some GOP defecting to the Democrat proposal or the other way around. I don’t care which. I will cite McArdle on the consequences of this insanity; the list directly below is a selection from a post of hers:
- Standard & Poor will downgrade our bonds. Fitch and Moody’s, however, are not going to downgrade us unless we actually default–which, as I’ve said, I don’t think we’ll do.
- Nonetheless, there will be considerable disruption in markets, less because of the direct regulatory problem, than because markets–like the rest of us–like to believe that there is some sheriff in town. The level of political instability implied by a congress that does not raise the debt ceiling is a level of political instability that makes all financial transactions riskier. The willingness of people–foreigners especially, but also Americans–to hold our debt will be permanently impaired. That will be expensive. Also, voters are going to be unhappy when their 401(k) portfolios start behaving like a manic depressive coke addict in detox.
- We also don’t know if Fitch and Moody’s will hold the line. They’re telling reporters they will–but how will they feel in a month? Who knows? If they downgraded us significantly, the resulting sell-off just from money market funds could feel a lot like a replay of 2008. Only this time, it’s not clear that anyone in the government has the authority to step in and stop a run on the money markets; the issue was left conspicuously unaddressed by Dodd-Frank.
- Geithner may have some other gimmick up his sleeve, like minting $2 trillion platinum coins, swapping Social Security treasuries for public debt, or selling our gold reserves. (Good riddance!) If so, expect screaming from the left (he’s raiding the social security trust fund!) or the right (plundering our nation’s vital stores of precious metal), and the thing may drag on for months.
- If he does not have these tricks up his sleeve, many things people like–a lot!--will probably stop.
- Whatever happens will not last long. The constituencies which make up the tea party do not necessarily understand how much of their life is underwritten by the government. But they will. When the market starts convulsing, and checks stop coming, and states have to do emergency property tax hikes to make up for lost federal revenue, angry constituents are going to mob their congressmen. About five minutes after the first doctor tells a senior citizen that he can’t treat any more Medicare patients until he gets paid, the tea party caucus is going to crawl back to Capitol Hill and beg to pass whatever will make it stop.
- In the aftermath, we will, over the long term, pay more to borrow money. At least some of that is going to be paid for with higher taxes.
- Everyone else is probably going to pay more to borrow money, too. The US is a net borrower, and this sort of instability means paying more to attract capital. And a whole lot of debt, including fixed-rate debt, is priced off of treasuries.
- Consumer confidence, already shaky, will take a blow. It’s hard to say how much this matters, but it certainly matters some; like markets, consumers want to think that there’s someone in charge.
Alright, everyone? A potential default is very bad stuff. It means we pay more on the debt we already owe, right now. It means our credit rating goes down the toilet. It means we don’t have money for necessities like highways or emergencies like tornadoes hitting an area.
I don’t just vote Republican, I’m campaigning heavily for one. I’m not a liberal by any stretch of the imagination. Certain GOPers have to go. To cement this case, I am going to start a list below of those who claim default is some kind of joke below, along with their comments. I want the list all over the Internet. I’d like it if you’d add to the list in the comments with quotes and statements from Congressmen and Senators (with links to those statements).
I ask that you do not post about the insane partisanship of some Democrats at the moment. Trust me, I’m aware of that problem, and we will fight that too. Here’s the list so far:
- Jim Jordan (Ohio) – no disaster August 2nd. There will only be a “glitch,” to use his term.
- Dennis Ross (Florida) – “I don’t think Treasury has been up front with us. I am not convinced the sky will fall in on August 3…. I’m not an economist, but I have maintained a household. The federal government owns 70 per cent of Utah, for example. There are federal buildings. If you need cash, let’s start liquidating.”
- James Lankford (Oklahoma) – “It’s a moving target. Even if Aug. 2 is passed, Treasury has the tools in its back pocket to keep us from defaulting…. Treasury has done a good job of trying to increase the panic, rather than giving us solutions.” (btw, read McArdle to see that Treasury’s “solution” would probably include liquidating all our precious metals.)
- Justin Amash – links to this crank on his Twitter who asserts “The simply [sic] truth is higher taxes are not needed, and the U.S. does not have to default if no deal is struck by August 2.” (For a refutation of the article, see this.)
- Paul Broun (GA) – wants to lower the debt ceiling. You read that right.
- Scott DesJarlais (TN) - If his numbers bore any resemblance to the truth, no one would be worried about default. Here’s him on the offensive against anyone who suggests that we might be out of money: “To suggest that the United States will be unable to make our debt payments or not pay our military or seniors is completely wrong and unnecessary. Our federal revenue is great enough to cover debt-interest payments, Social Security and Medicare payments and pay for our military personnel.”
- Michele Bachmann (MN) – no, we won’t default on our debt. But she’s not going to vote to increase the debt ceiling. How does this add up?
- Trey Gowdy (SC) – voted against the Boehner proposal because of a friend who voted for TARP and didn’t get to be governor. I couldn’t make this up if I tried.
- Jeff Duncan (SC) – Accuses the Treasury secretary of “scare tactics.” Then goes on to warn that the bond ratings for this country might be in danger.
- Tim Huelskamp (Kansas) – more accusations of “scare tactics.” After all, we’d have a whole week after Aug. 2nd before someone downgrades our debt!
- Ron Paul – of course default is harmless. His views on Watergate should have demonstrated his tireless commitment to principle.
Again, this is just to get started. I need you guys to continue the project. We’re only going to get sanity if we work for it.