Ahead of tomorrow’s elections, Republicans have been making clear they have no interest in working across the aisle with Democrats to govern the country, with Republican Conference Chairman Mike Pence (R-IN) vowing “no compromise” and Senate Minority Leader Mitch McConnell saying his first priority with a larger GOP caucus would be to beat President Obama in 2012.
Appearing on CNN’s State of the Union yesterday, RNC Chairman Michael Steele echoed this obstructionist pledge. Particularly troubling, Steele told host Candy Crowly the GOP is “not going to compromise on raising the debt ceiling” — something that will almost certainly lead to a government shutdown and economic catastrophe:
CROWLEY: Let me start first with the majority leader of the Senate saying the single most important thing that Republicans want to achieve in the next two years is to make the president a one-term president. You’ve had the Republican leader on the House side saying this is — no, we’re not going to compromise, and you yourself had said that Republicans are not looking to compromise. Is that what you’re taking away from the polls right now, that the American public doesn’t want the Republicans to compromise on anything?
STEELE: Well, I think that, to be very clear here, when we talk about not compromising, not compromising away on the principles that our party have run on and have stood for, for a long time. For example, we’re not going to compromise on creating more debt. We’re not going to compromise on raising the debt ceiling. We’re not going to compromise on increasing the burdens on the backs of small-business owners and families.
Republicans and their outside secretly-funded allies like Crossroads GPS have made government spending and the national debt a central focus of thousands of attack ads against Democrats. Many ads have specifically attacked incumbent Democrats’ previous votes to raise the debt ceiling (which only Congress can and must increase periodically to allow the government to keep functioning). It now appears that Steele is the latest Republican leader to join some of his party’s most extreme candidates in their vow to translate campaign rhetoric into a potentially catastrophic reality.
A report released last week by the Center for American Progress outlined the potentially devastating consequences of failing to raise the debt ceiling:
— Government Shutdown: The budgetary implications of failing to increase the debt ceiling would result in “the immediate cessation of more than 40 percent of all federal government activities (excluding only interest payments on the national debt), including Social Security, military operations in Iraq and Afghanistan, homeland security, Medicare, and unemployment insurance.”
— Default on the National Debt: During the previous GOP-induced debt ceiling crises in 1995-96, the Treasury Department used extraordinary measures to avoid defaulting on the national debt. Deutsche Bank analysts believe that those same measures would be less effective today and the government would “not be able to stave off a government shutdown (or possible suspension of bond payments) for long.”
— Worldwide Financial Panic: “Refusing to raise the debt ceiling would recklessly disrupt the sale and purchase of new Treasury bonds, and could potentially cause a run on outstanding Treasurys as well, as investors sought other investments. This could have catastrophic consequences for our economy as well as the economic stability of the rest of the world.”
— Economic Catastrophe: Suddenly pulling trillions of dollars in public spending out of the economy, as well as inducing a worldwide financial panic and a run on U.S. sovereign debt would “almost certainly result in a severe drop in economic growth and employment” and could potentially “take us into a Second Great Depression.”
— Actually Increase Long-Term Deficits and Debt: By undermining the credit worthiness of U.S. government, annual borrowing costs would skyrocket. A mere doubling of the current rate the government pays for a 10-year Treasury note would nearly double the cost of annual interest payments on the national debt to approximately $600 billion—increasing long-term deficits and fueling even more high-cost borrowing. If investors begin pricing a “fear premium” into U.S. debt, costs could be driven even higher.
A vote to raise the debt ceiling will be necessary as early as February of 2011. As Roll Call recently noted, this vote would pose an early purity test for newly-elected tea party-backed members of Congress. With Mississippi Governor Haley Barbour also saying today that a government shutdown is “very likely” if the GOP wins control of the House of Representatives, it appears that the GOP is more interested in fealty to its tea party base than in seriously governing the country — even if that means risking an almost unprecedented economic calamity and needlessly inflicting untold harm on the nation’s prospects for a return to long-term prosperity.
On a conference call last Wednesday, House Minority Whip Eric Cantor (R-VA) said Republicans will ask for an up or down vote to increase the debt limit next year. When asked whether that would be a difficult vote given the Republican pledge to cut spending, Cantor said they will “demonstrate a commitment to the fiscal discipline” by “reducing costs of running federal agencies and examining pay for federal workers” before the vote comes up.