The United States officially hit its legal debt limit on Monday, forcing the Treasury Department to dip into federal pension funds to prevent the country from defaulting on its obligations for the first time in history. Secretary Geithner has said he can only stave off default until August 2nd, at which point Congress must vote to raise the limit or risk setting off a global economic meltdown.
Republicans in Congress are not only holding the country hostage — demanding trillions of dollars in spending cuts before they will agree to raise the debt ceiling — but are increasingly denying that defaulting on our debt would even have negative economic consequences. Politico investigated this disturbing trend of “default denialism” in an article on Tuesday, pointing out that the claim is based on fringe conservative theories that have seeped into the political mainstream.
On his radio program yesterday, Rush Limbaugh blasted the Politico piece, proudly embraced the “default denier” label, and then went a step further — by claiming that not raising the debt limit would actually improve the nation’s credit rating:
LIMBAUGH: Today I claim the mantle. I proudly and honestly come to you today as the Mr. Big of the default deniers. We will not default on anything. And moreover, it is more likely that the country’s creditworthiness would go up around the world since we would finally be doing something to address our out-of-control spending and indebtedness if we were not to raise the debt limit. We would be perceived around the world as serious for a change, and responsible for a change. Otherwise we are headed for junk bond status.
Limbaugh proceeded to suggest that Democrats are trying to destroy the country by raising the debt ceiling. “The only people who want that…are the people who seek to fundamentally transform this country as it was founded.” Additionally, he said “Keynesian economics doesn’t work unless destruction is the objective.” In his broadcast, Limbaugh also falsely claimed that the Politico article compared default deniers to Holocaust deniers.
Of course, Limbaugh’s bold assertions fly in the face of economic expertise — not to mention common sense. Nearly all mainstream experts agree that defaulting on our obligations would force the U.S. into another recession, possibly worse than the Great Recession that started in 2008, and have devastating ripple effects on the global economy. It’s also unlikely that world markets will view America’s failure to pay the bill on money it’s already spent as a “responsible” move. One hopes Limbaugh’s listeners did not try to test his theory by refusing to pay their credit card bills on time, expecting their credit scores to go up.
The only people using the default crisis to advance a political agenda are Republicans, who are exploiting the need to keep the country on sound financial footing by demanding outrageous concessions, like repealing health care reform or cutting federal spending by 40 percent. Republicans have voted to raise the debt ceiling dozens of times in the past, but this time they have pledged to let the clock run down to the zero to get what they want.