Several Republicans in the last few months have put forth the idea that the U.S. doesn’t actually have to raise the debt ceiling when the nation hits its legal borrowing limit sometime around Aug. 2. “I doubt that it would be disruptive to the economy,” said Sen. Pat Toomey (R-PA). House Budget Committee Chairman Paul Ryan (R-WI) has made remarks along the same lines.
However, other Republicans have admitted that failing to raise the debt ceiling — and thus forcing the U.S. to default on some of its obligations — would spark a crisis, but that the crisis should be welcomed as an opportunity. “By defaulting on the debt, in the short and long term, it could benefit us to go through a period of crisis that forces politicians to make decisions,” said Rep. Devin Nunes (R-CA). And during an interview today on MSNBC’s Morning Joe, Republican National Committee Chairman Reince Priebus said that Americans would actually appreciate the economic consequences of failing to raise the debt ceiling:
SCARBOROUGH: But what do you believe though? Do you believe that if we don’t raise the debt ceiling, the economy will just keep chugging along normally, or do you believe that it will cause a financial crisis?
PRIEBUS: You know, I don’t know, because we’ve never been there before, Joe. But I do know that, I think –
SCARBOUROUGH: You can make a pretty good guess though? The markets would say ‘yikes’!
PRIEBUS: But the idea that we can’t cover — this is where I have a problem — when you hear people say that we’re going to default on our debts. I mean, we bring in enough revenue in this country to pay our debts, we bring in enough revenue in this country to pay our entitlements, we bring in enough revenue to pay for most non-discretionary spending. It is going to put the clamps on a lot of discretionary functions, it’s going to put the clamps on in Washington, but in some ways, I think that a lot of American voters say ‘well good,’ I hope it does make things uncomfortable.
Failing to raise the debt ceiling in a timely fashion could severely harm economic growth and, if the stalemate went on long enough, could cause a bigger GDP drop than the one that occurred during the Great Recession. An NBC News/Wall Street Journal poll released earlier this month shows that a growing number of Americans now favor raising the debt ceiling, with 46 percent in support and 42 percent opposed (up from 32 percent approval just two months earlier). Credit rating agencies have warned that having the U.S. miss some promised payments even for a few days could negatively impact the nation’s credit worthiness.