Republicans are Engaging in Economic Terrorism on Debt Ceiling Again

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Ben Cohen
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John Boehner: Unable to control the economic terrorists in his party John Boehner: Unable to control the economic terrorists in his party

One of the reasons why it is so difficult to appear balanced when discussing American politics is the astonishing dysfunction of the Republican Party. It no longer operates as a legitimate or sane political entity, so giving two sides of the story is almost completely pointless. Despite being somewhat corrupt, inefficient, and beholden to corporate interests, the Democratic Party still operates within the parameters of sanity, so it is still worth examining what they have to say.

Let's take the debt limit for example - an issue that basically determines the American government's ability to pay its bills. On the one side Democrats see no short term harm in raising the debt limit (the amount of money the government is authorized to borrow) so that government is able to function properly and ensure the economy ticks over. Of course there is dissent within the party as to how much the limit should be raised, how the government can go about lowering it in the future, and a host of other sensible issues that should be discussed in depth. And on the other side, the Republicans are willing to throw the country back in to recession by preventing the government from raising the debt ceiling, all in the name of ideological purity.

In 2011, the Republicans held the country to ransom and forced the President to make severe cuts to welfare and enact long term cuts to the government's budget. The GOP argued that the debt, caused primarily by the massive spending during the Bush years and the financial bailout that happened during his Presidency, was out of control and had to be drastically cut. John Boehner led the campaign to tie the debt issue to Obama's Presidency and accuse him of being irresponsible. The standoff over the debt ceiling was used to box Obama in on an issue that should never have arisen in the first place. To put it in perspective, George W. Bush raised the debt ceiling 7 times, while Ronald Reagan raised it 18 times.

Preparing to do battle again in 2013 with Republicans eager to get revenge after losing out during the 'Fiscal Cliff' negotiations, President Obama is doing his bit to frame the debate on terms favorable to the Democrats (ie. in reality). He said yesterday:

If Congressional Republicans refused to pay America’s bills on time, Social Security checks and veterans’ benefits will be delayed. We might not be able to pay our troops or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialists who track down loose nuclear materials wouldn’t get their paychecks.

Investors around the world will ask if the United States of America is in fact a safe bet. Markets could go haywire. Interests rates would spike for anybody who borrows money. Every homeonwer with a mortgage, every student with a college loan, every small business owner who wants to grow and hire.

It would be a self-inflicted wound on he economy. It would slow down our growth, might tip us into recession and, ironically, would probably increase our deficit.

The President's assertions aren't exactly controversial, and that's the point. The Republicans know full well what will happen if they refuse the President's ability to raise the debt ceiling, and they will use it again to dismantle what is left of the welfare state. Given their complete silence during the Bush years when he was cutting taxes and increasing spending, it is hard to take them seriously when they claim to be concerned about the deficit. This is pure politics, and given the stakes, it is actually a form of economic terrorism. As the right leaning Economist magazine said of the debt ceiling, it is 'A weapon of mass financial destruction', and serves no real purpose. The Op Ed piece continued:

The debt ceiling long ago outlived its usefulness. Congress already has the final say over the budget. And Republicans looking for leverage have alternatives. These include the threat of almost $90 billion of annual spending cuts due to take effect in March and, soon afterwards, the possibility of letting the authorisation for a chunk of federal spending expire, forcing the government to shut down. Though hardly ideal, both would be less destructive than default. If instead Republicans wage another fight over whether America should meet its legal obligations, they will reinforce the impression that the country can no longer be trusted. Better to scrap the debt ceiling now.

The previous debt ceiling debate resulted in America having its triple-A credit rating slashed by one agency. The Republicans are willing to harm the country severely to get their way, and there is little the President can do to stop them if they decide to repeat their actions in 2011.

Obama is doing the smart thing here - he's adopting the same tactics he used for the 'Fiscal Cliff' debacle by going on the offensive before the negotiations start and boxing the Republicans in when it comes to public opinion. Obama masterfully framed the 'Fiscal Cliff' conflict as the Republicans holding the country to ransom, forcing them to back down and concede ground to the President when it came to raising taxes and leaving the welfare state alone. The execution of the deal wasn't fantastic, but generally speaking, the Democrats came out on top. The President's job now is to set the conflict up to portray him as the savior of the economy, and the Republicans as the enemy willing to burn the house down for political gain. John Boehner isn't stupid, and he knows his party is going to look ridiculous given what happened over the New Year. He is apparently busy trying to get his party to back down on the debt ceiling debate, but as we've seen, he has little control over the extreme elements in the GOP.

It looks like we're set for another pointless battle that will probably hurt the public and destroy the Republican's reputation further. The problem is, is doesn't matter how unpopular the GOP gets as long as they control Congress. They still get to bully the President and ruin the country in order to get their way, and there is little that can be done about it.