Let’s start with the following axiom: House Republicans wouldn’t be holding serial votes on piecemeal government funding bills (all of which President Obama has threatened to veto, by the way) if they didn’t know that suspending these programs was such a huge political liability. So suddenly the Republicans of arbitrary austerity and anti-bureaucrat fame are pretending to be tribunes of the public sector. That dog won’t hunt. At least I really doubt it will. But the strategic logic collapses entirely when you recall that the debt limit needs to be increased in two weeks. These might sound like unrelated issues, but they’re heavily entwined. Once the Treasury can no longer borrow to finance deficits, it will have to arbitrarily slash spending on everything the government does — from defense, to social insurance, to medical research, and eventually to debt service. The government currently borrows about 30 cents on every dollar, which means that irrespective of the impact on U.S. creditworthiness and global financial markets, the effects on these services will be enormous. Probably something like four or five times the impact of sequestration, but with no exemptions. And the only way to exempt anything (at least in theory) is to either force the administration to direct revenues toward favored services, which would mean much deeper cuts to everything else, or to allow the Treasury to borrow specifically to finance those services. In other words, to increase the debt limit but only for targeted purposes. Pragmatically, neither of these options would work, but like the mini-appropriations bills the House has passed, they would allow Republicans to pretend they’re trying to protect camera-ready government programs, or that the breach would be harmless but for Democratic intransigence. Indeed, the House has already attempted to force Treasury to prioritize interest payments to U.S. creditors — to “Pay China First,” as Democrats say — and benefits for Social Security recipients in the event of a breach. That effort failed. But if it had succeeded, it would mean everything else — all the things Republicans are rallying around right now — would take a harder hit if U.S. borrowing authority lapses this month. The GOP’s current position thus boils down to to the laughable idea that nothing’s more important than reopening federal monuments, funding clinical trials, and spending money on veterans services for two weeks, until we breach the debt limit and they have to be shut down again. And it suggests that if we do breach the debt limit, even briefly, Republicans will move immediately to mitigate the political damage. But unlike a fight over appropriations, there’s no real way to address the consequences in piecemeal fashion. The only way to fix the service interruptions will be to increase the debt limit. By then, though, U.S. standing will already have suffered irreparable harm and the economic consequences might be irreversible. I think this probably says something about how serious Republicans are when they entertain the threat of breaching the debt limit. But their strategy is so purposeless and disjointed — each move so blundering and ill-conceived — it might also be the case that Republicans haven’t put any thought into it at all. Getting a concession — any concession, however narrow — has become a fixation.
Posted on: Tue, 08 Oct 2013 05:51:50 +0000
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