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.
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