For months, Republicans have been trying to have it both ways on the debt ceiling, with some members saying that having the U.S. default on its obligations would not be a bad thing, while the leadership has admitted that failure to raise the debt ceiling would have serious adverse consequences. But since the debt limit was officially reached earlier this month — forcing Treasury Secretary Tim Geithner into measures that can delay default until about August 2 — the GOP has moved towards more irresponsible debt ceiling rhetoric and actions.
Last night, the GOP brought a debt limit bill to the floor that was explicitly designed to fail, which was defeated overwhelmingly as Democrats refused to play along and vote for a bill that would never pass. Today, Ryan appeared on Fox News and said that unless Democrats accede to Republican demands, the debt ceiling will not be raised at all. “It won’t happen. I’m serious about this,” he said.
[Raising the debt ceiling] will happen if we get the kind of spending cuts we need to get the situation under control. It won’t happen, I’m serious about this, it won’t happen if we don’t cut spending.
But just a few months ago, Ryan admitted that failing to raise the debt ceiling was “unworkable.” “Yes, you can’t not raise the debt ceiling. Default is the unworkable solution, or the alternative, I guess I’d say — the unworkable alternative,” he said during an appearance at the National Press Club.
Failing to raise the debt ceiling could spark severe economic consequences, including pushing the U.S. back into recession (as Bank of America analysts predicted) or “reignit[ing] the world financial crisis,” in the words of Princeton Professor Alan Blinder. It would threaten the fragile housing market and potentially wipe out much (if not all) of the estimated 2011 growth. But Republicans continue to play chicken, holding the U.S. economy hostage for their conservative agenda.