The ongoing fight over ‘Obamacare’, aka the Patient Protection and Affordable Care Act of 2010, blatantly highlights that America has chosen a path of self-harm by means of boggling confusion.
Take the most recent Republican talking-point regarding the probable entwining of the debt ceiling negotiations with the resolution of the partial shutdown of the Federal Government and the ‘Obamacare’ squabble. These comments have splattered the news but are perhaps most succinctly summed up by Senator Tom Coburn [R-Okla] who stated on CBS This Morning ‘There’s no such thing as a debt ceiling… I would dispel the rumor that’s going around that… if we don’t raise the debt ceiling, we’ll default on our debt — we won’t.’
This balks common sense, the Treasury Department and historical precedent. It is possible for the United States to default on loans. The US defaulted on approximately $122 million worth of Treasury Bills in 1979 due to unanticipated demand and a computer glitch. This quickly rectified accident led to a drop in confidence and a rise of 0.6 in national borrowing costs in an era when America played an indisputably larger role in global affairs.
When more nuance and explanation is added, the claim is even contradicted by those who support the notion. Senator Richard Burr (R-N.C.) justified his denial of Treasury Secretary Jack Lew’s warning of pending default through stating ‘the federal government still has about 85 percent of the revenues that we spend coming in, and all they have to do is prioritize that we’re going to pay debt service first.’
Since when is 85 percent 100 percent? And without credit, where does the Government get the funding for the remaining government services even if debt service payments are prioritized? Nor would prioritization protect the full faith and credit of the United States. It might soften the impact to the bond market, but the nation would still be defaulting on assigned financial obligations.
And even if this was not true, what is supposed to go? Non-military Discretionary spending only makes up 17 percent of the budget, almost all of that would have to be cut to meet the deficiencies caused by this plan.
But the Republicans seem to miss the fundamental point entirely. The October 17th date is the estimated time at which we run out of money. It is not an arbitrary date. We have already spent the money, most of it is gone, and October 17th is when the Treasury Department predicts that it will all be gone. To continue funding our governmental obligations, as of that date, including debt service payments, the debt ceiling must be raised.
Regardless of the validity of any of this, the markets speak for themselves. The Dow Jones, NASDAQ, and Standard and Poor’s 500 Index all closed Monday at the lowest levels in a month. It is ironic that the ‘Party of Capitalism’ seems to have forgotten that the economic reaction to a debt ceiling breach is fundamentally not up to the Government. It depends on how businesses will react to viewing our moronic Legislatures playing with fire. And as it seems, even the prospect of a debt ceiling breach is having negative market consequences.
Yet what is most confusing about this crazy-speak is it seems to undermine the Tea Party’s plan. If the debt ceiling is meaningless, why should the Administration negotiate with the GOP in order to secure its increase? I thought the plan was to hold the entire global economy hostage in order to strong-arm out of existence the centre-right legislation known as ‘Obamacare’. The Republicans are conjuring a way to blame the Administration for the catastrophe they are creating, but through doing so are undermining the leverage they need to avoid the catastrophe and get their way.
Perhaps this represents a psychotic break from reality. An attempt to feel better about the irreparable harm they intend to inflict on the global economy by way of a temper tantrum over the fact the Democrats have taken credit for a Republican health care plan.
The other option is that the GOP thinks their constituents are dumb, and that everyone who is smart enough to see through this already opposes them, and maybe they are right about that. But the insanity must end. America is giving democracy a bad name. No wonder the Chinese are still fake Communists.
 Wilkerson, John, Smith, David, Stramp, Nick, ‘Tracing the Flow of Policy Ideas in Legislation: A Tet Reuse Approach’, (New Directions in Text as Data Workshop, London School of Economics, 2013) http://www.kenbenoit.net/pdfs/NDATAD2013/PolicyIdeas2013TextasData.pdf