Getting lost in the finger pointing, the dysfunctional U.S. Congress inched closer to what Moodys Analytic’s chief economist Mark Zandi called an economic calamity of epic proportions. President Barack Obama and House Speaker John Boehner (R-Ohio) show no signs of blinking while both dig in their heels. Boehner seeks nothing short of a delay to Obama’s Affordable Care Act, believed politically by GOP insiders to eventually do in the Republican Party. Some analysts believe implementing Obamacare would change the electoral calculus for generations, making it virtually impossible for Republicans to win national elections. Signed into law March 23, 2010, Republicans waited to the 11th hour for their grandiose last stand. If Obama caves on the Affordable Care Act, there’s nothing stopping House Republicans from blackmailing the government on any other arbitrary issue.
If the GOP wins concessions on Obamacare by threatening to default the country, there’s no stopping them from doing the same with other government entitlements, like Medicare, Social Security or Medicaid. Tea Party Republicans want no part of government entitlements and wouldn’t hesitate to coerce the government again to win concessions on what’s considered sacrosanct. With Treasury Secretary Jack Lew specifying Oct. 17 as the drop-dead date to run out of cash to meet obligations, the clock ticks on Obama and Boehner. Boehner said Oct. 6 on ABC’s “This Week” with George Stephanopopoulos that the U.S. was headed for a default unless Obama is willing to negotiate on U.S. debt. Boehner acts as if he and the GOP were saving the nation from an imminent financial collapse, when, in fact, they’re assuring the economy will fall back into recession.
Boehner insists that if he lets a “clean” vote go forward in the House it would fail. “I told the president there’s no way we’re going to pass one. The votes are not in the House to pass a clean debt limit, and the president is risking default by not have a conversation with us,” said Boehner. If Boehner holds a “clean” vote and the measure fails, it’s a whole new ballgame for Obama. He’d be forced to consider compromising on GOP demands. Refusing to put a “clean” vote on the floor proves that Boehner fears a mutiny from moderate Republicans growing tired of his dangerous game of chicken. Countries like China, that holds $1.277 trillion in U.S. Treasury Bonds, doesn’t want to hear about an impending U.S. default. Fed Chairman Ben S. Bernanke has been conspicuously absent from growing debate about a potential default of the U.S. government on Oct. 17.
Boehner and his Tea Party friends believe that they have the right formula for economic success. Yet when they were in power during the Bush years, they’re economic policies led to an economic failure of epic proportions. It was former President George W. Bush and his Treasury Secretary Hank Paulson that began the bailouts that rapidly raised the debt ceiling. Today’s need for $16.7 trillion to avoid default was directly related to the Great Recession that required Bernanke to buy $85 billion a month in Treasury Bonds to keep U.S. financial institutions from running out of cash again. Boehner and his Tea Party friends love to blame Obama for the government’s bad debt but give him no credit for cutting the U.S. budget deficit in two. Now running at around $607 billion a year, it’s less than half of the amount when Barack took office Jan. 20, 2009.
Toying with the idea of a U.S. default is no joke for Wall Street and financial markets around the globe. If the government can’t get its act together, the U.S. will lose its place as an economic safe haven. “If they don’t pay on the debt, that would cost us for generations to come,” said Zandi, raising the stakes as the train wreck draws near. Democrats and moderates in the House have practically begged Boehner to stop playing games and put up the “clean” vote. “Let me issue him a friendly challenge. Put it on the floor Monday or Tuesday. I would bet there are the votes to pass it,” said Sen. Chuck Schumer (D-N.Y.), urging Boehner to end the impasse. If Boehner really believed there’s not enough votes, he would have put the measure up long ago, to apply even more pressure on the White House. Boehner has held out because he knows the charade would be over with a full House vote.
Obama and Boehner’s macho game-playing hints that there’s a face-saving way out for both parties. Obama’s been content to let Boehner drag out crisis to further bloody the GOP brand. As the day of reckoning draws near, it’s time for both sides to claim victory and let 800,000 federal workers return to work. While the Tea Party are no economists, Zandi offers a real warning of higher interest rates, mushrooming debt and unfeasible payments on the national debt should the crisis drag on much longer. Fed Chairman Ben Bernanke has warned the GOP about slashing more government spending, especially shutting down the government. Acting like they have a magic bullet for the economy, the Tea Party insists on slashing the budget and reducing spending. Beranke’s approach of cheap interest rates and more liquidity from quantitative easing has kept the economy moving forward.
About the Author
John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He’s editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.