House Republicans are divided about the crucial debt limit vote, which they will face early in the next Congress. Some of the remaining establishment Republicans, including the incoming Speaker John Boehner, want the US to follow through on its obligations. The incoming tea party Republicans, however, have no problem bathing the country in fire:
But some of the incoming Republicans, such as Rep.-elect Tim Scott of South Carolina, a rising party star, have made it clear they wouldn’t support raising the debt limit because of their concern about federal spending.
“The vote will garner a lot of attention and provoke a lot of pain and anxiety, but there are consequences to all votes,” Mr. Scott said. “The question is, when are we going to stop the way we are going? I think we have to stop it now.”
During this year’s Congressional campaign, many of the GOP newcomers attacked their Democratic opponents as spendthrifts for past votes to raise the debt limit. Wisconsin Republican Reid Ribble, for example, who eventually defeated incumbent Democratic Rep. Steve Kagen, blasted Mr. Kagen for voting to increase the ceiling in February, calling the debt “unconscionable” and “insane.” Mr. Ribble couldn’t be reached to comment [...]
Rep.-elect Bill Johnson of Ohio said those who ran on such messages didn’t intend to reverse themselves now. “Most of us agreed that to increase the limit would be a betrayal of what we told voters we would do,” he said.
If Boehner actually wants this vote, I don’t think there’s a whole lot to worry about here. He’d get upwards of 180 Democrats in support and would only have to find 40 or so from his side of the aisle. There’s a path to allowing the tea partiers to stand firm on their principles while still getting the debt limit raised.
However, the most likely scenario is for Boehner to use the leverage he has to extract significant spending cuts in exchange for the vote. If those cuts are draconian enough that House Democrats refuse to support them, then we could see an impasse.
And that would have catastrophic consequences for the nation and the world, potentially setting off a global financial panic. This, of course, seems to be the preferred position of the politics-of-economic-destruction Republicans, as emphasized today by Paul Krugman.
The fact is that one of our two great political parties has made it clear that it has no interest in making America governable, unless it’s doing the governing. And that party now controls one house of Congress, which means that the country will not, in fact, be governable without that party’s cooperation — cooperation that won’t be forthcoming [...]
How does this end? Mr. Obama is still talking about bipartisan outreach, and maybe if he caves in sufficiently he can avoid a federal shutdown this spring. But any respite would be only temporary; again, the G.O.P. is just not interested in helping a Democrat govern.
My sense is that most Americans still don’t understand this reality. They still imagine that when push comes to shove, our politicians will come together to do what’s necessary. But that was another country.
It’s hard to see how this situation is resolved without a major crisis of some kind.
I think the Republican brand is crisis, at this point.



29 Comments


Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
Gotta love the irony of the Teabaggers making Marx’s analysis of captialism come true:
….Let them go right ahead with the shutdown then. Let’s see then how their “base” responds when their own Soc Security benefits are not paid, or parents, disabled kids, grandparents etc have to move in with the “base supporters”.
We’ll see when they have to support, feed, pay medical bills and feed their families who need help, what they think of the “people” they voted for in an attempt to vote Against the Dems.
Nothing about the next year is going to be pretty; in fact, I’m pretty sure that most everything political is going to be as ugly as it gets.
I’ve been thinking about this shut down threat. I say let them do it. I’ve told everyone I know that is on social security, disability, or expecting an UI benefit to start saving now. There maybe a month or longer that the shut down lasts.
In fact, I think the repugs are using that as a test balloon for drowning the government in the tub. I think it is will bite them in the arse, but you know, they already have scarred flanks and buttocks. Maybe this time it will take out a leg if they inflict that kind of pain on Americans.
Well said, or quoted. ;-)
Never forget that the Republicans are the party of Big Business and the Wealthy, who would be grievously injured by a default, or even a credible threat of default. In particular, there will be no failed bond auctions allowed. The debt limit will be raised. They may accomplish nothing else in the next two years, they may never pass a budget and may shut down the government repeatedly, but the debt limit will be raised.
Of more interest, they will try to use it as a bargaining point to get other concessions. Decent Democrats would not stand for it. Too bad we don’t have many of those…
No problem. Just end all the Bush tax cuts, and there will be no
need to raise the debt ceiling.
Can we pull up those repugs that had no problem spending that money the past 9 years? Nevermind, it doesn’t matter to them. It is just a theme to take more from the little people.
If the newly elected teabaggers hold firm, the GOPs who vote to raise the debt know they’ll face destructive and divisive primaries in 2012. Their vote will be heralded everywhere as a betrayal of Teabag Nation.
What to do, what to do?
Betray the wealthy, or a bunch of teabaggers whose activities are funded by the wealthy? A dilemma indeed. It might give them pause for hundreds of milliseconds.
I love it!!!
the intelligent left needs to used the TEA PARTY to destroy the GOP.
the TEA PARTY is going to make DC, a very funny place!
tee-hee (snicker)
It has a really nice glow, that thought. Pretty orange to be exact.
Pooh, is that you? You’ve got your head stuck in the honey jar again.
As the Daily Beast article points out Boner needs only 40 GOP votes to get the deficit raised, and he will bring it. The empire can deal with these hotheads no sweat. They will just provide amusement while normal business get’s done.
Let’s take the worst case scenario however. The debt ceiling not being raised would not shut down the government. That can only come by blocking the big omnibus appropriations. A frozen debt limit just means some checks couldn’t be cut. It would then be up to Geithner which bills to pay. Oh sure, suppose the White House may have some say but Tim will tell them whats important.
This is actually a good scenario for all concerned. As FDR famously said, ‘go out and make me do it’, make other politicians put political pressure on him to do what he wanted to do anyway so it is with Obama. Except he wants the right to make him do it. At any rate he will be all over making the tough cuts instant cuts this spring.
Hmmm, the author of that piece needs to make a slight correction. People looking for Capital, Vol 4, won’t find it. The 3-vol set of Theories of Surplus Value is commonly referred to as Vol 4 but is a separate publication.
I for one would welcome a shut down. I’d love to see the look on Grandpa Teaparty’s face when his SS check bounces.
Sigh, time for another Public Service Announcement…
We don’t need to ever raise the debt limit, or for that matter, run a budget deficit. Coin seigniorage is booked as miscellaneous revenue (just as the Federal Reserve’s net profits are) and not debt. The Fed buys all coins at face value. A dollar coin costs 12 cents to make, so once the Secretary of Treasury sweeps the profits out of the US Mint Public Enterprise Fund into miscellaneous receipts, every dollar coin sold to the Fed reduces the deficit by 88 cents, hooray!
Like all good business plans, its scalable. The Secretary has been delegated pretty damn broad seigniorage power (“specifications, designs, varieties, quantities, denominations, and inscriptions”). Tsy could mint a trillion dollar platinum coin (remember cost of minting is not related to face value) and deposit it with the Fed. The Enterprise Fund is credited with $1 trillion. The Secretary can sweep out the Fund at any time into miscellaneous receipts and the deficit drops by $1 trillion with no borrowing. The Fed will still have to pay interest on reserves to keep the federal funds rate stable. With a 0.25% IOR rate, that would cost $2.5 billion a year in reduced Fed profits (versus more than $30 billion a year in net interest if Uncle Sam had sold, for no reason at all really, $1 trillion in Treasuries). The things people worry about, geez.
There shall be established in the Treasury of the United States, a United States Mint Public Enterprise Fund (the “Fund”) for fiscal year 1996 and hereafter… the Fund may retain receipts from the Federal Reserve System from the sale of circulating coins at face value for deposit into the Fund… at such times as the Secretary of the Treasury determines appropriate, but not less than annually, any amount in the Fund that is determined to be in excess of the amount required by the Fund shall be transferred to the Treasury for deposit as miscellaneous receipts…
51 USC 5136
The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
31 USC 5112(k)
Contrary to popular belief, if the debt ceiling isn’t raised, the government won’t have to default on its debts and/or shut down. Instead, it will respond to the shortfall by using the only means left open to it: printing more money. This will debase the value of the dollar and send it into an inflationary spiral, to be sure; but a significant net result of such debasement would be the elimination of huge amounts of dollar-denominated debt. Most GOP donors *hold* debt, and will burn up
Then hit the floor with your face bitch !!
… The phone lines to keep this from happening. The dems should call their bluff and vote against raising the debt ceiling, forcing almost every GOP representative to vote for it.
Err, no. Creating new money is inflationary when the economy is at full employment. We have a trillion dollar plus output gap with 25% of industrial capacity lying idle and 20% of the workforce either unemployed or underemployed.
“Printing” money (its just numbers on a spreadsheet for the most part, printed Federal Reserve Notes are just a tiny fraction of the money supply) and spending it in socially productive purposes (instead of force feeding it to investment banks) is the best thing the government could do right now.
The GOP voter is being told ‘what to do’..They thought that they were voting for jobs and a better economy..not to be..shame on them
They won’t have to go to the mat, because President Bipartisan will bend over backward to accommodate their every whim.
An Obama with balls would let it be known that he would, if no increase, fire two thousand Generals, cancel 100 billion in contracts for new Pentagon toys, order Military pay not paid and order troops not in the mid-east home, closing 3/4ths of the nations military bases, kill Ag subsidy money outflow, end out-sourcing of gov function in civil service and the military contracts, end all aid to states.
And then sit back and wait.
But then, unless Obama borrows two of Hillary’s balls, we have a President Obama with no balls.
So what is the over/under – does he cave on tax cuts for rich before he caves of the debt limit via giving up some progressive item he inherited from FDR? He is going to do both – so we should have at least a little fun with the situation.
By law the Fed can not directly fund a government deficit.
It’s always inflationary.
Prices may not rise, if other deflationary forces (for instance declining effective demand) offset the inflationary force.
Price rises are one potential result of inflation, but they are not the same thing.
That’s why coin seigniorage is the fastest way out of the woods. Since its booked as revenue, its not debt and it reduces (or conceivably, eliminates) the deficit.
OK, if you define inflationary as such that “prices may not rise”, then I’d assert as long as we don’t overclock the economy by spending money past the point of full employment, then we don’t have to worry about debasing the dollar or sending into “an inflatonary spiral”.
However, to be prudent, we could do worse then set a market ant-inflation system of the sort that Abba Lerner & David Colander proposed (and that William Vickrey later endorsed) in lieu of controlling inflation with interest rate hikes.
Rep. Boehner and the Republicans are betting on another cave by the Dems. They might win their bet, especially if we see Dems lose their collective nerve on more tax cuts for the rich this year.