With just days to go until the nation hits the debt ceiling on October 17th, a growing chorus of Republican lawmakers have begun dismissing the dangers of national default, insisting that the government can continue paying interest on its debt and fund the most critical programs.
Economists have dismissed this prioritization scheme as chaotic and unworkable, warning that the United States would be “unable to pay between 40 to 45 percent of the 80 million payments it makes every month.” If the debt ceiling is not increased, the credit markets would freeze, the value of the dollar would plummet, interest rates would skyrocket, and a global recession would ensue.
But the so-called debt ceiling truthers, who swept into power after the 2010 midterm elections and, to the surprise of GOP leaders, took over the debt ceiling debate, continue to deny this reality. Below is a brief timeline showing how they rose to power and prominence within the Republican party:
OCT: CANTOR PROMISES A CLEAN VOTE. House Minority Whip Eric Cantor (R-VA) says Republicans will ask for a clean up or down vote on an increase of the debt limit next year.
NOV: BACHMANN KICKS OFF DEBT CEILING PETITION. Rep. Michele Bachmann (R-MN) starts a petition calling on voters to “force our elected officials to stop spending cold turkey, and we can start by making sure they do not raise the debt ceiling.”
NOV: LEE’S PLAN TO NEVER RAISE THE DEBT CEILING AGAIN. Senator-elect Mike Lee (R-UT) appears on PBS’s News Hour and pledges that he will vote against any increase in the debt ceiling. Instead, he urges Republicans to “consider across-the-board cuts” as a solution to the debt ceiling.
NOV: FRESHMEN WON’T SUPPORT A DEBT CEILING VOTE. GOP leaders informally poll the incoming freshman and were surprised to discover that “all but four of them said they would vote against raising the ceiling, under any circumstances.”
DEC: IT WON’T BE ‘THE END OF THE WORLD.’ Rep.-elect Mick Mulvaney (R-SC) said he would vote against any attempt to raise the nation’s debt ceiling because “I have heard people say that if we don’t do it it will be the end of the world.” “I have yet to meet someone who can articulate the negative consequences.”
JAN: PAWLENTY ADVOCATES PRIORITIZATION. Former Minnesota Gov. Tim Pawlenty (R) appears on MSNBC to tout Minnesota’s 2005 government shutdown and flesh out a proposal he has that would strictly sequence government spending in order to avoid the U.S. defaulting on its debt. He tells Chuck Todd that failure to raise the debt ceiling is good for the U.S. economy and said that the GOP should hold the debt ceiling hostage to cuts in entitlement spending.
JAN: PRIORITIZATION BILLS INTRODUCED IN THE SENATE. Pat Toomey pens a Wall Street Journal op-ed announcing his intention to “introduce legislation that would require the Treasury to make interest payments on our debt its first priority in the event that the debt ceiling is not raised.” The following month, Toomey files the “Full Faith and Credit Act” as an amendment to legislation reauthorizing the Federal Aviation Administration (FAA). Sen. David Vitter (R-LA) introduces legislation (S. 259) to “require that the Government give priority to payment of all obligations on the debt held by the public and payment of social security benefits in the event that the debt limit is reached.”
MAY: PRIORITIZATION BILL INTRODUCED IN THE HOUSE. Rep. Todd Akin (R-MO) introduces legislation to “specify the priority of the obligations of the United States Government if the debt ceiling is reached, to provide for an emergency appropriation of funds to pay for certain defense and national security obligations during a gap in funding.”
MAY: BOEHNER TRIES TO PLEASE BOTH SIDES. Boehner tries to walk the fine line between placating the fringe elements in his party and acknowledging that allowing the U.S. to hit its debt limit is not an option. “It’s true that allowing America to default would be irresponsible,” he says, but adds, “Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase.”
MAY: SENATORS CHALLENGE TREASURY ON DEBT CEILING. Seventeen GOP senators wright a letter to Treasury Secretary Tim Geithner “asking him to explain his recent claims that America will default on our debt payments after August 2, while the Congressional Research Service has said default could be delayed by prioritizing federal spending.” The senators include: DeMint, Burr, Coburn, Cochran, Hatch, Johanns, Johnson (WI), Inhofe, Lee, McConnell, Paul, Portman, Risch, Thune, Toomey, Vitter, and Wicker.
JUNE: RYAN IS OKAY WITH BRIEF DEFAULT. House Budget Committee Chairman Paul Ryan (R-WI) says, “If a bondholder misses a payment for a day or two or three or four — what is more important is you are putting the government in a materially better position to better pay its bills going forward.”
JUNE: TREASURY RESPONDS TO THE DEFAULT DENIERS. Geithner responds, writing that under prioritization, “There is no guarantee that investors would continue to re-invest in new Treasury securities” once it became clear that the U.S. political process was prepared to stiff people who are owed money. Ratings agencies have already made it clear that they would regard any prioritization scheme with suspicion.
JUNE: BPC REPORT DETAILS CONSEQUENCES OF DEFAULT. The Bipartisan Policy Center issues a report finding that Treasury will be unable to pay 40 to 45 percent of the 80 million payments it makes every month, concluding that prioritizing payments to avoid default — which some conservative Republican lawmakers advocate — is essentially impossible.
AUG: DEBT CEILING DEAL REACHED. At the last minute, Congress passes the Budget Control Act, increasing the debt ceiling immediately by $400 billion, then by another $500 billion after September.
JAN: PRIORITIZATION MAKES A COMEBACK. Toomey promises to resurrect the Full Faith and Credit Act. “We should pass a bill out of the House,” he said, “saying there will be certain priorities attached to certain things, namely payment of debt services and payment of our military.”
MAY: HOUSE PASSES PRIORITIZATION BILL. Without any Democratic support, the House passes legislation to allow the government to borrow money above the debt ceiling to service U.S. bondholders and make payments related to the Social Security Trust Fund. The measure passes 221-207.
OCT: ‘THERE IS NO DEFAULT.’ “We’re not going to default; there is no default,” says Rep. Mick Mulvaney, (R-SC). “There’s an [Office of Management and Budget] directive from the 1980s, the last time we got fairly close to not raising the debt ceiling, that clearly lays out the process by which the Treasury secretary prioritizes interest payments.”
OCT: BOEHNER SAYS U.S. IN ON THE PATH TO DEFAULT. House Speaker John Boehner (R-OH) tells ABC’s This Week that the nation would default on its debt if Obama does not agree to GOP’s demands to cut spending and change parts of the Affordable Care Act. “That’s the path we’re on,” he says.
OCT: CONGRESSMAN COMPARES DEFAULT TO HIS HOME BUDGET. Rep. Joe Barton (R-TX) advances debt “prioritization” by comparing the plan to his own household. “Well, we have in my household budget some bills that have to be paid and some bills that only paid partially,” he says.
OCT: CONGRESSMAN CLAIMS DEFAULT ‘WOULD CALM WORLD MARKETS’. Rep. Ted Yoho (R-FL) told the Washington Post that in his mind, not raising the debt ceiling “would bring stability to the world markets.”
OCT: COBURN CLAIMS THERE IS NO SUCH THING AS A DEBT CEILING. Sen. Tom Coburn (R-OK) tells CBS News there was “no such thing” as the debt ceiling and that if it is not raised the United States will not default on its debt. “There’s no such thing as a debt ceiling in this country because it’s never been not increased, and that’s why we’re $17 trillion in debt. And I would dispel the rumor that’s going around that you hear on every newscast that if we don’t raise the debt ceiling, we’ll default on our debt — we won’t. We’ll continue to pay our interest, we’ll continue to redeem bonds, and we’ll issue new bonds to replace those.”
OCT: COLLINS SAYS TREASURY ‘PLAYS GAMES.’ Sabrina Siddiqui reports that Sen. Susan Collins (R-ME) says default is serious but that Treasury “plays games” and therefore October 17 might not be a hard deadline.
OCT: STEVE KING SAYS WE CAN GO ‘INDEFINITELY’ WITHOUT DEFAULT. “The money masterminds decided we would hit that date (the debt ceiling) sometime in about July. And we timed somethings to have that debt ceiling debate in July, well it didn’t come, because the Treasury was using what they call extraordinary measures,” Steve King told a local radio show. “Which means they tapped into every account they possibly could, they delayed the payments that they could in other areas. And we rolled this debt ceiling from what was hitting a wall, default they call it, in July, into all the way over now they say it’s October 17th. Well we shouldn’t accept that as the date beyond which we can’t go without what they call default, we can go a long long time. We can go indefinitely without hitting default. So I don’t think it’s really going to get, the continuing resolution is going to get into default, if we define these things correctly. And it troubles me a little bit that I see our House leadership use the language of default on the debt ceiling.”