Debt-limit: GOP threatens to blow up economy

Republicans have decided to pour gasoline all over the economy and dance around it with lighted matches. They say they don’t believe it will blow up.
An exaggeration? Not really. A growing group of rightwing skeptics claims that a failure to increase the debt ceiling would not harm the economy. In fact, it could have catastrophic consequences.

From Politico:

They are the newest breed of government skeptics, the swelling ranks of Republicans who don’t believe the Obama administration when it says a failure to raise the debt limit will prove catastrophic.

And they stand ready to make negotiations over raising the cap on debt as grueling as possible, leaving Treasury officials and Wall Street more nervous than ever that the country could suffer an unprecedented default, with consequences no one can predict.

The suspicion, which once flourished only on the conservative outskirts of economic circles, has seeped into the mainstream in recent weeks, gaining broader acceptance among establishment Republicans even as the administration issues increasingly dire warnings. . .

“The one acting like his hair is on fire is Mr. Geithner,” said Rep. David Schweikert (R-Ariz.). “It’s absolutely silly. We have plenty of cash flow to pay debt, which means I’m trying to figure out how credibly the administration can keep using that language.”

The doubters reject Geithner’s repeated claims — backed by Wall Street — that failing to raise the statutory cap would force the federal government into the first default in its history.

I suppose it’s no great surprise that the GOP, especially its radical House members, refuses to believe President Obama. The worldview of the GOP is informed by a deep suspicion of the president.

But they’re supposed to be the allies of business, and Wall Street keeps telling them that the failure to raise the debt ceiling could be disastrous. Hasn’t the GOP been preaching for the last two years that uncertainty has slowed the economy to a crawl? What creates more uncertainty than playing games with the nation’s credit limit?
Even a blogger at the conservative National Review Online has noted that they stepped on their talking point about uncertainty:

Over the last couple of years, a common conservative talking point about federal policy changes has been that uncertainty is dangerous. . .A debt limit standoff certainly fosters uncertainty, discouraging investment and growth.

Running around with lighted Molotov cocktails, GOP radicals seem to have forgotten a lesson from just a little over two years ago, when President George W. Bush begged them to pass a bank bailout to keep the economy from falling off a cliff. They refused, and the stock market went into a tailspin, dropping 778 points — the biggest single-day loss ever — and wiping out $1.2 trillion in value.

A few of them were chastened by that and voted for the bank bailout a few days later. But it took the stock market awhile to recover.

If the U.S. defaults on its debts, it will lose its luster as the world’s primary economy and safest investment. And it may never recover. But the inmates running the asylum seem willing to take that risk.
——— By Cynthia Tucker

210 comments Add your comment

casual observer

May 17th, 2011
10:03 am

I hear America is getting a waiver.

Peadawg

May 17th, 2011
10:04 am

“Debt-limit: GOP threatens to blow up economy”

What’s wrong with wanting to include some spending cuts in a debt limit-increase bill? It’s seems easy to me. But the Democrats would just rather blame blame blame.

Gator Joe

May 17th, 2011
10:08 am

Cynthia,
The Republicans are in a no-win situation. If they don’t raise the debt limit and tank the markets, their Wall-Street Masters/Benefactors will punish them. Also, not raising the debt ceiling and damaging the economy (more than they have already) will be yet another blunder and cost them at the polls.

Keep Up the Good Fight!

May 17th, 2011
10:11 am

It seems that the Republicans would rather see the economy fail and then blame Obama rather than to take responsibility for leading this country down a path of fiscal responsibility.

guy

May 17th, 2011
10:12 am

The vast majority of people want spending cut instead of raising the debt ceiling.Those are the ones who work,pay taxes,and support those who don’t care about debt or have the attitude that everything is rosy and everything’s cool.
It doesn’t matter what party you voted for because this nation is in deep poo poo.Arguing with CT is nothing but a waste of time because while we argue and fuss,Rome burns.

JohnnyReb

May 17th, 2011
10:14 am

Once again Ms Tucker, you fall in line with the Obama Administration; pushing their hyperbole in attempts to use the fear of the uniformed public to pressure Republicans to abandon the correct course.

There is no magic here. It’s really simple. Just as little Timmy found a way to extend the debt deadline until August, Obama and his cronies can find a way to operate the country on the money taken in. All they have to do is control spending.

The Republicans have put forth a common sense solution. A dollar increase in the debt for each dollar reduced in spending. Only those hell-bent to ruin the country think that’s a bad course.

Larry

May 17th, 2011
10:14 am

How about a line on “Democratic radicals running around spending billions we don’t have” are not willing to rein in their spending. Seems like a compromise is in order. The Dem’s don’t have a majority in all three branches anymore and need to understand that compromise means more than sit in a meeting with Rep’s and then use the bully pulpit to blame the Rep’s because they don’t agree with you.

Peadawg

May 17th, 2011
10:15 am

“ather than to take responsibility for leading this country down a path of fiscal responsibility.”

Wouldn’t that be Obama’s job? To lead this country?

It should say, “It seems that the Obama would rather see the economy fail and then blame the GOP rather than to take responsibility for leading this country down a path of fiscal responsibility.”

RambleOn84

May 17th, 2011
10:16 am

Yeah, increasing the debt limit would be good though, right Cynthia?

I mean, when you don’t have any more money to spend, the only RESPONSIBLE thing to do is borrow more, RIGHT CYNTHIA?

It would be totally irresponsible to stop spending money, RIGHT CYNTHIA?

Larry

May 17th, 2011
10:17 am

Peadawg – You forgot – he’s leading from behind

Peadawg

May 17th, 2011
10:18 am

“Peadawg – You forgot – he’s leading from behind”

Yup. According to Keep the GOP, who controls ONLY the House, should be leading this country now. Obama can go play some more golf.

Keep Up the Good Fight!

May 17th, 2011
10:19 am

Pea….Leadership is only the responsibility of the President? How silly. I guess you dont think that the President is not taking with Senators and Representatives and members of Executive Branch and only speaks at public events. Just because you dont know what is going on does not mean that there is not leadership.

RambleOn84

May 17th, 2011
10:19 am

News flash: the economy has already failed.

Check some numbers on the REAL unemployment numbers (including underemployment and those who have quit looking for employment); look into how many Americans are on some type of government assistance; look at how large the gap has grown between the rich and the poor (I thought Obama and the Democrats were going to shrink this!)

We are all collectively polishing the silver on the Titanic.

Keep Up the Good Fight!

May 17th, 2011
10:21 am

Pea…you must have already conceded rational discussion with the cheap shot…. silly child.

Peadawg

May 17th, 2011
10:23 am

“Pea…you must have already conceded rational discussion with the cheap shot…. silly child.”

Cynthia conceded that by blaming this all on the GOP who again, only controls the House. Silly girl.

Larry

May 17th, 2011
10:23 am

Keep up the good fight – Be nice if he listened instead of just talking, especially when and if he’s talking with people who don’t agree with his ideas.

granny godzilla

May 17th, 2011
10:23 am

G’head GOP let America default.

I have made the appropriate financial preparations to protect myself and my family.

Wishing you all the best…..

Scooter (The Original)

May 17th, 2011
10:25 am

Leverage is needed when negotiating with a party that calls less than 40 billion in spending cuts draconian.

RambleOn84

May 17th, 2011
10:27 am

If anything, the GOP is being weak when it comes to the budget.

Rand Paul came up with a budget that would balance everything within 5 years, but very few would agree to it.

Jack

May 17th, 2011
10:33 am

Geithner cheated on his tax return. I’d just as soon trust an asylum inmate.

Really last word

May 17th, 2011
10:35 am

Anybody who still thinks Obama is a smart man and a great speaker after that childlike speech in which he used the analogy of a moat w/alligators in it . . . obviously do not know an intelligence when they see it because that was the most immature thing a President could say. Does not sound like “presidential” talk at all. Obama has never stopped being in campaign mode; every time he opens his mouth he talks about the Republicans as though he is still campaigning . . . “Hey, Obama the campaign was over and you were elected . . . you need to be President of the “United” States, but yet you have become the “MOST DIVISIVE” President ever . . .you’ve divided this country socially, racially, and by class. Weren’t you the one who said you would rather do the right thing than to be re-elected – duh! Weren’t you the one who said, “we won” and basically, it is our way or no way!!! Then you turned around and blamed Republicans for not coming up with “a plan” regarding healthcare! All of this when both the House and the Senate were controlled by the Democrats and the Republicans were shut out totally! Wasn’t it the liberals who went around saying the Republicans were the party of “NO!” . . . when they weren’t even given a chance to present their “Plan” ~~ Well the Democrats are the party of “SPEND, SPEND, SPEND!” And, “SPIN, SPIN, SPIN” every situation into being the Republicans’ fault!!!

Not Blind

May 17th, 2011
10:35 am

Anybody that thinks maintaining the status quo on fiscal policy is the right thing to do is an outright idiot. Just like Obama said, we need change !!!! Quit spending money we don’t have !!! How hard a concept is that to grasp ? Our ‘leaders’ on both sides of the aisle have sold out. The whole concept of the USA being in debt to another country should make every citizen of this country IRATE .

resno2

May 17th, 2011
10:37 am

Oh look, it’s campaign time again!!! Here comes another crisis that the savior obama can blame on the GOP.

Why wasn’t this crisis addressed when the budget was passed by the dems last year… oh wait.. nevermind, i forgot the campaign didn’t start ‘officially’ until this year.

Fed-Up

May 17th, 2011
10:42 am

“Just Like Obama Said, We Need Change” NIce change…Drs have already begun denying care to overweight patients. 1 in 5 Obamacare waivers have been granted in Pelosi’s district and $50 light bulbs hit the shelves next year. Great Change !!!

ragnar danneskjold

May 17th, 2011
10:42 am

Good morning all. Our hostess proffers a “political” argument while averring it is “economic.” The US Government is not the equivalent of “the economy.” Nonmilitary government spending is a drag on the economy, not a stimulus – one would think that even leftists would recognize that reality now that we are three years into ObamaNomics.

For a more detailed and cogent analysis of the potential effects of spending constraints on the nonmilitary portion of the US government, I would respectfully refer our friends to the Stanley Drukenmiller essay in last Saturday’s WSJ,

online.wsj.com/article/SB10001424052748703864204576317612323790964.html?mod=ITP_opinion_0

The Leg Lamp is a "major award" much like CT's Pulitzer and Obama's Nobel.

May 17th, 2011
10:42 am

Don’t blow up the economy, just issue waivers…..

“Nearly 20 percent of new Obamacare waivers are gourmet restaurants, nightclubs, fancy hotels in Nancy Pelosi’s district”

ragnar danneskjold

May 17th, 2011
10:43 am

Apologies, it was an interview with Mr. Drukenmiller, not an essay.

ragnar danneskjold

May 17th, 2011
10:43 am

And I cannot spell, “Druckenmiller.”

The Leg Lamp is a "major award" much like CT's Pulitzer and Obama's Nobel.

May 17th, 2011
10:44 am

The ripple effect of Obamacare….

“IT BEGINS: Doctors Refusing To Treat Overweight Patients…”

Robyn

May 17th, 2011
10:45 am

I seem to recall Senator Obama and several other democrats voting against raising the debt limit while there was a republican in the White House. But it seems they are immune from CT”s biased rantings.

The Leg Lamp is a "major award" much like CT's Pulitzer and Obama's Nobel.

May 17th, 2011
10:49 am

Robyn
May 17th, 2011
10:45 am

Cynthia’s posts are often “hate rants”.

A Lumpkin Resident

May 17th, 2011
10:51 am

One party refuses to make cuts to prevent unsustainable increases to the debt limit.

The other party refuses to increase the debt limit this time until they do. They are willing to increase the debt limit this time if cuts are made to get things under control.

Which party is more to blame? It sounds like the Democrats are dancing around the gasoline with matches. The Republicans are trying to head off an almost certain downgrade in U.S. Debt and the loss of the Dollar as the world reserve currency. The Democrats are trying as fast as they can to increase the debt, downgrade that debt, pay more for debt service, and lose preeminence in the world financial sector.

From ANY objective standpoint, the Republicans are doing the right thing. The only leverage that they have is the threat of meltdown. Sans that, the debt continues to spiral out of control and the U.S. loses anyway. The ONLY way out of this mess is to get spending under control. the ONLY thing that Republicans can be called out on is that cutting spending AND increasing taxes would be a more balanced solution. Yeah, maybe taxes are too high. BUT, getting the deficit under control is a lot more important than keeping taxes at their current rate. Giving up the “Bush taxcuts” is a small compromise to make in order to get the deficit under control.

resno2

May 17th, 2011
10:52 am

Robyn…”it seems they are immune from CT”s biased rantings”

You’re not just figuring that out are you? CT (and Granny for that matter) have been paying homage to obama and his ilk since day one, and have yet to not blindly nod like a bobble head at everything he says.

Martin the Calvinist

May 17th, 2011
10:58 am

1. Didn’t Obama say when he was a US Senator that it was irresponsible to raise the debt ceiling and that we endangered our children and grandchildren with debt we couldn’t pay back. Didn’t he also say it was a lack of leadership to raise the debt ceiling w/o dealing with the budget.

2. Liberals need to quit thinking that if you just cut spending in defense, eliminate the tax breaks for the oil companies, and raise taxes on the rich only then we would have enough money to deal with the debt. There isn’t enough money in those three entities doing those three things. That is totally naive!

3. It’s time we stop raising the debt ceiling and we institute real cuts in the budget, across the board. No gimmicks, no using tax dollars to buy favor and votes!

RambleOn84

May 17th, 2011
11:01 am

Cut welfare and warfare spending.

Since Roosevelt, we have been spending more and more and more on “fighting poverty,” yet we have more poverty than ever.

Likewise, every year we spend more and more and more on military yet we are no more safe than we ever were. Couldn’t we drastically cut that amount, shut down the 190+ (!) foreign military bases overseas, and secure our borders?

Wouldn’t we save money, help our economy, and make us safer by doing these things?

BlahBlahBlah

May 17th, 2011
11:01 am

So if we don’t keep propping up the artificial bubble, the bubble will burst. When will we ever get our house in order if this is ALWAYS the argument the folks in D.C. want to make?

resno2

May 17th, 2011
11:02 am

If obama said it was lack of leadership to raise the debt ceiling then he’s got it made! There is no one more lacking of leadership than he.

ArkansasAngie

May 17th, 2011
11:02 am

It is both Republicans and Democrats. Unelect them both. In the mean time, cuts spending. More importantly … raise the limit only as far as August 2012, before the election. I want to know prior to my vote just who is looking after my best interest.

Some people are stupid

May 17th, 2011
11:18 am

Just for thoughts…to implement the Ryan plan, you would have to raise the debt limit.

In fact, you would have to raise it at least twice in 10 years.

RambleOn84

May 17th, 2011
11:36 am

The Ryan plan was only slightly better than the Democrats’ plan…both were weak.

GoJackets

May 17th, 2011
11:42 am

I suggest we borrow ourselves out of debt. That’s the responsible answer!

Peadawg

May 17th, 2011
11:42 am

Great article, Cynthia. You are so right. I’ve always maintained that the Republicans are the personification of pure evil. More and more they’re proving me right. Go Democrat Party!!! Go President Obama!!!!

Greed Rules

May 17th, 2011
11:44 am

the greedy republicans are trying to block everything Obama is trying to do to help lower income people and minorities. I’m getting tired of this. Hopefully, in 2012, a bunch more democrats are elected to stop the conservatives from taking away all of our benefits.

Common Sense

May 17th, 2011
11:47 am

Why are you so willing to sell your children into debt slavery, Cynthia?

Are you really that selfish?

Another Voice

May 17th, 2011
11:49 am

The dems need to call the Repuks bluff on this one…. let them take us to the brink!!! That is what is going to take for people to see clearly what these idiots represent for the country.

bphilb

May 17th, 2011
11:49 am

What’s the matter CT? Are you afraid that your special interests will lose their funding?
Many of us for years have preached the need for fiscal responsibility. I wish I had the capability of raising my credit limit without recrimination. Your problem is if we cut spending that food stamps, welfare and other “social” fundings will capitulate.
Cut the fat. Let’s get a handle on expenditures. Tax revenues are ample enough for this country to live long and prosper. Stop fighting the enevitable and face reality! We can no longer spend at this level. The rich will take their money and go somewhere else if the burden continues to be placed on them. Just take a look at the exodus from New York. Florida says thank you!
I am just sayin’!

Robert

May 17th, 2011
11:49 am

Enough is Enough. I am sick and tired of all the President Obama bashing displayed on this site. The usual suspects (tea party, birthers, etc.) are out in full force today and their comments reflect their right wing extreme points of views. The American People need both sides of the US Congress to work in collaboration and deal with this very serious issue. The last 4 Presidents raised the debt limit with little or no difficulty and did face homegrown terrorism.

LydiasDad

May 17th, 2011
11:53 am

Yeah, those Dems have done wonders for our economy…

Steve Osborne

May 17th, 2011
11:56 am

No one believes what Obama says…he has no track record for stating the truth…and comments like this from this “chicken little” Cynthia Tucker is why the alot of people no longer read the AJC….it’s nothing but a liberal rag that spouts left wing propaganda…..CT is nothing but another left wing nutcase trying to prop-up Obama’s failing Presidency…..

Zedd

May 17th, 2011
11:57 am

I’ll put it in terms even Cynthia can understand, “We gonna burn this mutha’ to the ground!”