Earlier this month, House Budget Committee Chairman Paul Ryan (R-WI) admitted during an appearance at the National Press Club that failing to raise the nation’s debt ceiling when the legal borrowing limit is reached in the coming months is “unworkable.” “Does it have to be raised? Yes, you can’t not raise the debt ceiling,” Ryan said. However, acknowledging that reality didn’t stop Ryan from taking the debt ceiling hostage to unspecified spending cuts and “fiscal controls.”
Today, on Fox News Sunday, Speaker of the House John Boehner (R-OH) pulled a similar stunt. He first said that House Republicans aren’t willing to raise the debt ceiling unless doing so is accompanied by deep spending cuts, but then admitted that failing to raise the debt ceiling would be a “disaster”:
That would be a financial disaster, not only for our country but for the worldwide economy. Remember, the American people on election day said, ‘we want to cut spending and we want to create jobs.’ And you can’t create jobs if you default on the federal debt.
Watch it :
Boehner is right that failing to raise the debt ceiling would be disastrous, rendering his and his party’s threats not to do so quite irresponsible. While Treasury could shuffle money around to avoid default if the debt ceiling is not raised, financial markets would likely be shaken, the government may have to shut down, and, as the Center for American Progress’ David Min pointed out, interest costs on the U.S. debt would spike, making the long-term budget situation worse:
If in the near term these rates moved even to 5.9 percent, the long-term rate predicted by the Congressional Budget Office, then our interest payments would increase by more than double, to nearly $600 billion a year. These rates could climb even higher, if investors began to price in a “default risk” into Treasurys—something that reckless actions by Congress could potentially spark—thus greatly exacerbating our budget problems…In short, a freeze on the debt ceiling would cause our interest payments to spike, making our budget situation even more problematic.
Sen. Lindsey Graham (R-SC) also said that failing to raise the debt ceiling would result in “collapse and calamity throughout the world,” while demanding regressive cuts to Social Security in return for his vote to increase the limit.
Cross-posted on The Wonk Room.