Editore"s Note
Tilting at Windmills

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November 1, 2010

THE DEBT-LIMIT SHOWDOWN LOOMS.... Fairly early on in the next Congress, lawmakers are going to have to approve yet another raise in the federal debt limit. At least, they should, if they hope to avoid an enormous catastrophe.

The problem, of course, is that quite a few far-right Republicans, especially those poised to win tomorrow, have no intention of doing what's necessary. Bruce Bartlett noted the other day that it's a disaster just waiting to happen.

I hope I am wrong, but I don't see any prospect of meaningful action by a Republican Congress that would reduce the deficit, and much reason to think it will get worse if they have their way by enacting massive new tax cuts while protecting Medicare from cuts. And as I have previously warned, I am very fearful that it will be impossible to raise the debt limit, which would bring about a default and real, honest-to-God bankruptcy -- something many Tea Party-types have openly called for in an insane belief that this will somehow or other impose fiscal discipline on out-of-control government spending without forcing them to vote either for spending cuts or tax increases.

When we talk about this crop of Republicans being absolutely stark raving mad, the debt-limit issue offers a terrific example. For years, responsible officials in both parties have recognized, particularly in times of war and/or economic crises, that extending the debt limit is a routine step necessary to keep America paying its bills.

But today's GOP is another animal entirely. Republican National Committee Chairman Michael Steele told CNN yesterday, "We are not going to compromise on raising more debt. We are not going to compromise on raising the debt ceiling." Republican candidates have been saying the same thing lately.

Just to be perfectly clear here, if Republicans retake the majority and block an effort to raise the debt limit, this tells the world that the United States isn't in a position to repay its debts. We're talking about an America in default. The practical effects could prove catastrophic to the global economy -- that's not hyperbole; that's just reality.

I assume the vast majority of voters have no idea that this is coming, and that GOP recklessness on the debt limit could lead to a genuinely horrifying calamity. On the contrary, attack ads this season have been targeting Democrats for their routine votes increasing the debt limit -- suggesting to voters that raising the limit is somehow scandalous and wrong.

Next year is likely to be ugly, but my sense is a lot of folks may not appreciate just how ugly it might get.

Steve Benen 3:20 PM Permalink | Trackbacks | Comments (38)

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Comments

I don't believe a word the rbaggers say. Hence, "What, me worry?

Posted by: reduced on November 1, 2010 at 3:20 PM | PERMALINK

please don't misunderstand my remarks, because if this happens people are going to get hurt. but when social security and disability checks stop coming, when federal employees get laid off and lose their paychecks, when people who have to deal with the federal government can't find anyone to solve their problems, when veterans can't be treated for their injuries and illnesses, i think the teabaggers are finally going to wake up.

pass the popcorn please.

Posted by: just bill on November 1, 2010 at 3:23 PM | PERMALINK

Here's a little fact that most teabaggers don't understand: 1 US Dollar does not represent $1 worth of something of true value like gold or silver, but rather represents $1 worth of the good faith and credit of the US government. The moment the US starts to default on its loans, therefore, the entire underpinning of our currency *vanishes.* Poof. No more.

If teabaggers think the national debt is bad, wait until the US Dollar is officially and literally worthless due to their actions.

-Z

Posted by: Zorro on November 1, 2010 at 3:26 PM | PERMALINK

The vast majority of Americans are simply to stupid to know what is about to happen in this country. The vast majority of Amercians 'belive' the actual opposite of what is true about almost everything. We are now in a country is which pure fantasy and delusions are considered to be the actual reality. And then make new laws and policies based on pure fucking delusions and fantasy. Just as 'just bill' said when ACTUAL REALITY PREVAILS then the stupid Amercian will wake up .. and not until. And then exactly who will these idiots blame then ?

Posted by: stormskies on November 1, 2010 at 3:28 PM | PERMALINK

Republican voters always vote against their best interest.

From the look of those tea baggers they seem to be living pretty well off of the government trough. Especially the red states. Once the government is shut down they are going to wake up and realize those unemployment, Medicare and Social Security checks they receive from the government.

Once their check doesn't show up in their mailbox two weeks after they shut the government down all hell will break loose.

Can't wait to see them get slapped by the hand that feeds them.

You get what you deserve.

Posted by: sensistar on November 1, 2010 at 3:31 PM | PERMALINK

why cant the current congress vote on this matter during the lame term?

Posted by: Tang on November 1, 2010 at 3:34 PM | PERMALINK

When and if the house caves in, Republicans and Tea Party zealots will point the finger where they always point it: Democrats in general and Obama in particular. Why would they change their minds just because of evidence that proves them wrong? The last rational Republican is as dead as the dodo bird.

Posted by: Decatur Dem on November 1, 2010 at 3:36 PM | PERMALINK

Explain to me why I should think that people that have been stockpiling guns and canned food for years are NOT intentionally destroying the global economic system? Seems like there are plenty of them who WANT the chaos and calamity that comes from such a move.

Posted by: biggerbox on November 1, 2010 at 3:36 PM | PERMALINK

Tang: if the Dems had a hair on their asses (as they say in my part of the world), they'd blitz the Republicans during the lame duck session and demand the debt ceiling be raised, painting the nightmare scenario before the Republicans can frame the debate. And since it's a budget matter, the most urgent budget matter, I bet they'd could pass it via reconciliation. But, as we know, the Dems are cowards and never learn that the best defense is a good offense. So they'll dither and assume Republicans won't follow through and who will be blamed this time for the government shutdown in the spring? Democrats and Obama.

Posted by: dalloway on November 1, 2010 at 3:40 PM | PERMALINK

...when ACTUAL REALITY PREVAILS then the stupid Amercian will wake up .. and not until. And then exactly who will these idiots blame then ?

The Muslim, socialist, anchor-baby, thief-of-our-freedoms and destroyer-of-worlds who's falsely occupying our White House, of course.

Next question?

Posted by: JCB on November 1, 2010 at 3:40 PM | PERMALINK

Logic has nothig to do with this
IT's all perception
The ceiling has to be raised

Who will blink first ?
Probably Obama

He'll agree to permanently extend Tax Cuts for the Rich
In turn, the Republicans will agree to co-operate and seek 'Bi-Partisanship'
It'll usher in a new era in American politics

Wait for it

Posted by: Frisco on November 1, 2010 at 3:40 PM | PERMALINK

Sadly, Frisco, you're probably right. The Dems could hold Republican feed to the fire by simply not acting on the expiring Bush tax giveaways, but they won't. Rather, they'll manage to hold their own feet to the fire until there's no alternative but capitulation.

Posted by: PQuincy on November 1, 2010 at 3:44 PM | PERMALINK

If the Republican do assume the majority in the House, the Dems should just sit back and say it’s their problem now to raise the debt ceiling. All the arguing, all the chaos, all the failure, will be on the Republican side. The Dems can just say, we’re no longer in the majority. Talk to the Republicans.

Posted by: Joe Friday on November 1, 2010 at 3:49 PM | PERMALINK

The mind-bobbling thing about this scenario, is that with a Tyrannical Marxist Liberal Fascist Dictator illegally installed as Blame Passer in Chief, won't Bill Ayers just program Obama to raise the debt ceiling to finally destroy the Amerikkka he hates with every beat of his black* heart?

*not a racist statement, btw.

Posted by: Mike on November 1, 2010 at 3:51 PM | PERMALINK

Next question? -JCB

Conspiracy aficiando?

Posted by: Kill Bill on November 1, 2010 at 3:52 PM | PERMALINK

Just because the USA is basically bankrupt doesnt mean Bernanke will stop printing money.

Posted by: Kill Bill on November 1, 2010 at 3:58 PM | PERMALINK

Moralizers. That's what Krugman calls them in a great column in the NYT today. I'm sure Steve will comment on it.

The Republicans are still suffering from the effects of Grade 5 dropout Texas oil billionaire supporters from the fifties. They just scam everyone with their false moralizing, just as the Texas billionaires did. It is working, because they are not being called on it. Where are all the Knowledge Economy billionaires to support the Dems? If Bill Gates, Warren Buffett and company really threw their support behind the Dems, the discussion would be vastly different -- intelligent instead of just a scam.

The liberal billionaires are all so high minded organizing their philanthropy that they don't want to sully themselves with crass support of a party, even though that support would eliminate the need for their high minded charity in the first place.

Posted by: Bob M on November 1, 2010 at 4:00 PM | PERMALINK

Should Republicans be in a position to act out this little calamity, they will surely blame Democrats for the irresponsible actions *Republicans* will take.

Democrats better not stand still for that - but if past history is any indicator, Republicans will get away scot-free with doing that.

Posted by: June on November 1, 2010 at 4:02 PM | PERMALINK

"The vast majority of Americans are simply to stupid to know what is about to happen in this country."

That's certainly true of some voters. All one has to do is see Rachel Maddow's interview with a couple of Joe Miller voters, both of whom were dumber than a bag of hammers. Most voters are pre-occupied in working and raising a family and don't have, or take, the time to keep up with the news. They get their news in snippets, so when the GOP creates their mantra, e.g., talking points, this is what the casual voter hears. It goes in one ear and out the other, and in between it rattles around in their consciousness.
The GOP is great at marketing, they just are incapable of solving problems, and only good at creating them.

Posted by: bradgalt on November 1, 2010 at 4:08 PM | PERMALINK

biggerbox touched on this, but it bears repeating. There is a sizable element out there that would welcome a global economic catastrophe. They are End-Timers, the same ones who want a war between Israel and Islam, because they yearn for Armageddon. That's Armageddon in a literal, Biblical sense, not just in a hyperbolic sense. These are people we should be truly afraid of. They can do enormous and irreparable harm.

Posted by: kw on November 1, 2010 at 4:27 PM | PERMALINK

I wager the TPers are blowing smoke for the campaign. The candidates who ran to win primaries courted them, but most changed their tune once they won a spot on the ticket. The few hardliners who make it to Congress will not be enough to change things, unless all the republicans go along. In that case, I'm with just bill above.

Make my popcorn salt free.

Posted by: CDW on November 1, 2010 at 4:30 PM | PERMALINK

You know, this meme of calling your opponents crazy is not working. Maybe it makes you feel better but the public is saying something you should think about and not dismiss. Bill Clinton was flexible enough to pivot and cooperate with a similar movement. The economy boomed and he got to take credit for it although his balanced budget was mostly projections and cutting the military by half.

We are in much worse shape now, mostly due to crazy speculation on housing that Bush tried to slow down but everybody assumed it would not kill the economy. This was not the time for spending to go to 25% of the GDP. There is open revolt by the people who pay taxes. If the Republicans don't fix this, they will also be thrown out in 2012. They lost their way in the 2000s and got tossed out in 2006. They had twelve years. The Democrats had two.

I think you would do well to pay attention to this but I'm not optimistic

Posted by: Mike K on November 1, 2010 at 4:38 PM | PERMALINK

Most U.S. government securities of our debt are owned by big banks and very wealthy people, hedge funds etc. Also foreign governments of course. How do you think the Tea Party paymasters will react to a sudden crater in their portfolios?
I honestly don't think the debt limit thing will happen. Maybe failure to pass appropriations bills, but not this.

Posted by: JMG on November 1, 2010 at 4:42 PM | PERMALINK

You raise a good point, JMG, and I hope you are right. But the fact is, Wall Street usually does better under the Democrats' policies, but they back the Republicans anyway. Failure to raise the debt limit will crush the banks and Wall Street, but do they really care? Past experience says they will shoot themselves in the foot knowing full well that they will be bailed out anyway. Over the past two years, they have earned the highest profits they ever had, and they still want to take out the people who gave them those profits. They are every bit as delusional as the teabaggers.

Posted by: fostert on November 1, 2010 at 5:01 PM | PERMALINK

JMG beat me to it. Tea Party rabble rouser freshmen are likely to get schooled by the moneyed class once the GOP is in the majority. As Bartlett points out, this is going to be a problem for the GOP.

Posted by: AK Liberal on November 1, 2010 at 5:09 PM | PERMALINK

@JMG - That assumes the banks really care about what happens to the US. Let's not forget they are currently sitting on several Trillion dollars in assets and are pretty much flat our refusing to lend money to anybody. And they are resisting, quite effectively, all efforts to make them put that cash to work in the US economy.

The banks have already written the US ecnomy off. The only question is how much more of our money are they going to steal while they invest in the rest of the world.

Posted by: thorin-1 on November 1, 2010 at 5:18 PM | PERMALINK

I think it's the Republican Governors' Association that's running ads in Alaska that flash trigger words on the screen - a repetition of 5 or 6 negatives about the candidate. One is "Cap and Trade," which has been turned into a 4-letter word by the Republicans, without the vast majority of Americans even knowing what it means. But it's become a negative label. So has the deficit, after 8 years of Republican (with Democratic enablers) excesses. So here comes "debt limit."

I have never understood how the Republicans can change the nation's lexicon within a week, but the Democrats can't come up with a pithy slogan or concept, a sticky label, once in a year. I've heard the term "Democratic strategist," but it must be a low-pay position because it seems to be vacant most of the time. The lack of messaging capability on the Dems' part can't just be blamed on right-wing media. They could get some themes going, and learn to pick up and echo what other Democrats or Progressives are saying and BRAND things themselves.

Posted by: ghillie on November 1, 2010 at 5:53 PM | PERMALINK

I was sitting in the dr.'s office the other day watching whatever soap opera it was they had playing on the TV and some political ad came on accusing the incumbent Dem Congressman in dark, sneering tones for having voted with Nancy Pelosi "three times to raise the debt limit." Yeah, I thought, because if they didn't raise the debt limit, the Treasury defaults and basically civilization as we know it comes to an end. But what do you expect from slimy right-wing PAC secret money ad buys?

Here's where it gets interesting: what's going to happen when it dawns on Wall Street that the kooks that Rick Santelli unleashed are willing to bring their empire to its knees to stop deficit spending? I'm sure there's some way to hedge or short the collapse of the US economy, so a few people will emerge as titans standing over the rubble that was once the United States, but for the rest of us, it's Thunderdome time.

Posted by: jonas on November 1, 2010 at 6:02 PM | PERMALINK

@thorin-1, see Zorro@3:26. That money they're sitting on will be worth much, much less once the US defaults.

Posted by: AK Liberal on November 1, 2010 at 6:09 PM | PERMALINK

This would be an unexpected bonanza: nutball tea baggers imploding the GOP right out of the gate and angering the country (including those money-loving Republican elites).

Posted by: Bob on November 1, 2010 at 6:30 PM | PERMALINK

The thing about not raising the debt limit is that NO ONE will believe it. It's such a flatly dumb and horribly destructive idea that every single member of our media, political and economic elite will assume that no matter what the crazy Republicans in Congress say, some deal will be reached at the last minute to raise the debt limit because the alternative is too horrifying to contemplate.

Which means that instead of this being treated as the awesome threat is it, everybody will just go to bed night expecting some deal overnight deal to be struck on raising the debt limit. Then they'll wake up the next morning to the zombie apocalypse.

Mike

Posted by: MBunge on November 1, 2010 at 6:44 PM | PERMALINK

But if the Bush tax cuts are extended without a 10-yr sunset (which is waht "making them permanent" means), then won't the CBO score it so badly that there is no way to pass it?

And of course nothing is really permanent, because a future Congress can always change the tax code.

Posted by: Mimikatz on November 1, 2010 at 7:22 PM | PERMALINK

Where did you go Joe DiMaggio?

Tell me this ain't going to be the way it goes down...

If Obama is already sending out feelers to get the reaction to letting the rich keep their tax breaks "temporarily" for a couple of more years, as in the couple of more years he occupies the White House, while getting a permanent tax break for the middle class, will he make a deal of some sort with the slime balls over the debt limit, like making the wealthy's tax breaks permanent?

If he does, when the republicans are through with him, the left is mad at Obama for not staying tough on the rich and the right is mad at Obama for raising the debt. Meanwhile, the republicans are laughing their asses off, rolling on the floor. They have everything they want plus momentum on rolling back the government expenditures they don't like.
If obama had a pair, he'd realize it's Congress's responsibility to raise the debt limit, not the president's. And he should simply tell Congress to do its job and raise the debt ceiling or to face the consequences of a government default/shutdown. Meanwhile, he should explain to the american people that it's up to congress to authorize the debt and expenditures and they have his recommendations to do so. If Congress doesn't want to practice what they preach about fiscal responsibility by raising the debt limit and eliminating tax breaks to the wealthiest at the risk of bankrupting the government, so be it.
After all, it's a constitutional separation of powers.

So to me, it's time for Obama to demonstrate brinkmanship and leadership at the precipe and and not more cowardice and compromise, marginalized and demonized. It's time to find out what Boehner is made of when he actually is in charge of the loonies that comprise most of his party. Bush 1 talked the tough talk about no new taxes and got backed down. Twenty years later the dems had no guts to do the same thing to Bush 2 and got bullied and railroaded into assisting in the train wrecks. Obama can continue with the gutless vagueness that is the soul of the democrats or he can say: No more. No way. Change we can believe in means standing up for a few principles rather than continuing to assist the other side in screwing the American people.

Until then, Obama's administration claim to greatness amounts to "Imagine how much more 'they' would have screwed you" if I hadn't been in charge. And to that logic: all I can say is: WAFJ BM. Thank you very much, may I have another.

Posted by: gone_west on November 1, 2010 at 8:02 PM | PERMALINK

The rich guys who financed all the Tea Bagger stuff are not doing it to lose money. And they will lose a lot if the US defaults.

Posted by: BigRed on November 1, 2010 at 8:09 PM | PERMALINK

WAFJ BM?

Posted by: Nor'easter on November 1, 2010 at 8:43 PM | PERMALINK

I think Gone_West is on to something. Congress has a much lower approval rating than Obama. I suspect that its approval rating will go down even more.

Obama needs to put some distance between himself and Congress. He can use it as a foil to frame the debate. If he can find a pair.

Tell the new Congress to raise the dept limit and make sure that the finger is pointed squarely at them when it doesn't.

He could also start by vetoing any extension of the Bush tax cuts that includes tax cuts for the richest 1%. Of course, I doubt he'll do this.


Posted by: DK on November 1, 2010 at 9:38 PM | PERMALINK

So that's how they plan to do it. Cause mass economic chaos by refusing to raise the debt ceiling, and then use it as an excuse to seize absolute power while the population is too shocked, poor, and weak to resist. Brilliant!

Posted by: FreakyBeaky on November 2, 2010 at 12:30 AM | PERMALINK

mik k: Bill Clinton was flexible enough to pivot and cooperate with a similar movement.


clinton also raised taxes...

and the only help he got from republicans were predictions of a depression..

how did that turn out?

mike k: The economy boomed

oh right..


if tax cuts and de-regulation worked alone..

how come republicans are not undefeated?

Posted by: mr. irony on November 2, 2010 at 7:48 AM | PERMALINK




 

 

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