Sen. Lindsey Graham (R-SC) has made it quite clear that he intends to use the debt ceiling — which needs to be raised in the next few months — to extract cuts to popular programs like Social Security and Medicare. “I’m not going to raise the debt ceiling unless we get serious about keeping the country from becoming Greece, saving Social Security and Medicare,” he said.

Graham clearly does not understand the nation’s finances, because the Greece comparison makes no sense. And it’s questionable whether he understands the debt ceiling, as yesterday he tweeted:

President Obama will NOT get a blank check to raise the debt ceiling.

— Lindsey Graham (@GrahamBlog) January 8, 2013

Raising the debt ceiling does not give the President authority to do anything except pay the bills that Congress has already accrued. And once upon a time, Graham understood the consequences of not increasing the debt limit, as he told CNN’s Wolf Blitzer last year that allowing the government to default on its obligations would mean “financial collapse and calamity“:

BLITZER: How realistic are those conditions? Because you know what’s involved if the U.S. creditworthiness is evaporated.

GRAHAM: Let me tell you what’s involved if we don’t lift the debt ceiling: financial collapse and calamity throughout the world. That’s not lost upon me.

Watch it:

Speaker of the House John Boehner (R-OH) has also admitted that failing to raise the debt ceiling would cause a “financial disaster.” (HT: Morning Money)

During the 2011 debt ceiling debacle — when House Republicans threatened to push the country into default unless they received policy concessions — Sen. Pat Toomey (R-PA) attempted to fix the situation with the “Full Faith and Credit Act.” The bill would supposedly prevent default by prioritizing certain federal payments in the event that the debt limit was reached and borrowing shut off.

Now that Congress has to raise the debt ceiling again in the next few months, Toomey is back with his bill, as Slate’s Dave Weigel reported:

On Laura Ingraham’s show today, Toomey averred that “we have to raise the debt ceiling” as a “stop along this path” to fiscal sanity. And then he resurrected Full Faith and Credit.

“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.”

As ThinkProgress explained at the time, Toomey’s plan is unworkable and doesn’t prevent the U.S. from defaulting on its obligations. These charts from the Bipartisan Policy Center show why. Once the debt ceiling has been breached and Treasury has exhausted the extraordinary measures at its disposal to avoid default, the government will be limited to only the revenue that comes in each day. BPC lays out what happens:

Toomey’s bill doesn’t fix this problem and doesn’t prevent the U.S. from stiffing someone who is legally owed money.

After an eleventh-hour deal to avert the so-called fiscal cliff, Republicans are already looking forward to the next manufactured crisis: the debt ceiling fight. Though raising the debt ceiling was considered a routine order of business in the past, radical Republicans took the nation to the brink of credit default for the first time in history, refusing to raise the debt ceiling if Democrats did not agree to devastating spending cuts.

The US hit its debt limit again on New Year’s Eve 2012, and House Speaker John Boehner (R-OH) seems ready to gamble with US credit again. As the Wall Street Journal’s Stephen Moore reports, the Speaker may try to avoid a sustainable deal over the debt ceiling, instead increasing the limit little by little. This would result in another debt ceiling fight every month:

I ask Mr. Boehner if he will take the debt-ceiling talks to the brink—risking a government shutdown and debt downgrade from the credit agencies—given that it didn’t work in 2011 and President Obama has said he won’t bargain on the matter.

The debt bill is “one point of leverage,” Mr. Boehner says, but he also hedges, noting that it is “not the ultimate leverage.” He says that Republicans won’t back down from the so-called Boehner rule: that every dollar of raising the debt ceiling will require one dollar of spending cuts over the next 10 years. Rather than forcing a deal, the insistence may result in a series of monthly debt-ceiling increases.

Most Americans want to avoid another debt ceiling fight like the 2011 debacle, which led to an unprecedented downgrade of US credit, an all-time low approval rating for Congress, and cost taxpayers $18.9 billion. But Boehner is taking his cues from anti-tax activist Grover Norquist, who floated the idea of a monthly debt ceiling increase as a way to extort more spending cuts from Democrats. Norquist’s strict pledge to never raise taxes, which most Republicans have signed, was the main cause of the crisis in 2011. Other Republicans seem eager to replicate the experience, including newcomer Sen. Ted Cruz (R-TX), who encouraged his colleagues to aim for another government shutdown.

If Boehner takes Norquist’s advice and institutes a regular debt ceiling battle, he may fulfill his own warning in 2011, when he predicted a global “financial disaster” if the US did not raise the debt ceiling.

Tea Party-aligned Sen. Ted Cruz (R-TX), within days of being sworn in, is already calling for a government shutdown unless Congress agrees to massive budget cuts.

During an appearance on Mark Levin’s radio show Friday, Cruz waxed poetic about the last time Republicans successfully shut down the government in 1995, arguing that a shutdown leads to better economic policies. “Because Republicans stood strong in 1995, we saw year after year of balanced budgets,” Cruz said. He went on to call for a repeat as Republicans hold the nation’s fiscal solvency hostage in the debt ceiling fight next month. “If we hold strong we can do that again,” the Texas Senator declared:

CRUZ: What would happen if the debt ceiling isn’t raised is it would be a partial government shutdown. We’ve seen this before, we saw this in 1995, when Republicans in the House shut down the government. What happened was it was a partial shutdown, there was some political cost to be paid but at the end of the day, because Republicans stood strong in 1995, we saw year after year of balanced budgets and some of the most fiscally-responsible policies Congress has produced in the modern-era. If we hold strong we can do that again. It just comes down to Republicans. Are we willing to stand strong and face the wrath of the mainstream media criticizing us and the president saying nasty things about us?

Listen to it:

Were Cruz and his Republican allies to succeed in shutting down the government, the effects would be felt widely. Over 800,000 federal workers would likely be furloughed, Social Security processing could be delayed, newly-eligible Medicare patients wouldn’t be able to obtain benefits, police and public safety officials could be cut, and veterans’ services would be impacted.

In addition, a debt ceiling negotiation itself is costly; last time Republicans held it hostage in 2011, the debacle cost taxpayers $19 billion.

The larger problem, however, is that by not raising the debt ceiling, Congress risks defaulting on the United States’ credit. If Cruz and his allies block a debt ceiling increase, the Treasury won’t be able to pay all its bills. As Matthew Yglesias notes, “The result won’t be a ‘shutdown’ of government functions; it’ll be a deadbeat federal government. Some people won’t get money they’re legally entitled to.” That’s why House Speaker John Boehner (R-OH) warned in 2011 that not raising the debt ceiling would cause “financial disaster” for the entire “worldwide economy.”

In his first week in Congress, Cruz is already earning a reputation as an unwavering firebrand. As he explained on Fox News Sunday this past weekend, “I don’t think what Washington needs is more compromise.”

In a his weekly address from Hawaii, President Obama reiterated that he will not negotiate with Republicans over raising the nation’s debt ceiling and said that any future efforts to reduce the deficit must include a combination of higher revenues and spending cuts.

Obama noted that additional revenue could come from closing tax loopholes and deductions Republicans themselves sought to reform throughout the 2012 presidential election and the fiscal cliff talks but were not altered in the compromise Congress passed to avert the fiscal cliff. Congress enacted $1.7 trillion in budget cuts last year and raised $620 billion in revenue in the fiscal cliff fix, a number that is far below House Speaker John Boehner (R-OH)’s offer of $800 billion during the cliff negotiations and lower than what would have been raised under Simpson-Bowles or Rivlin-Domenici.

From Obama’s remarks:

I believe we can find more places to cut spending without shortchanging things like education, job training, research and technology all which are critical to our prosperity in a 21st century economy. But spending cuts must be balanced with more reforms to our tax code. The wealthiest individuals and the biggest corporations shouldn’t be able to take advantage of loopholes and deductions that aren’t available to most Americans.

And as I said earlier this week, one thing I will not compromise over is whether or not Congress should pay the tab for a bill they’ve already racked up. If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic. The last time Congress threatened this course of action, our entire economy suffered for it. Our families and our businesses cannot afford that dangerous game again.

Since Obama signed the “American Taxpayer Relief Act of 2012,” the GOP has insisted that the measure “settles the level of revenue Washington should bring in” and have turned their attention to using the leverage of the debt ceiling to secure spending cuts and entitlement reforms.

During George W. Bush’s presidency, however, Republicans voted to increase the debt ceiling 19 times without ever demanding spending reductions, increasing the debt limit by nearly $4 trillion. In 2011, Boehner even warned of the consequences of holding the nation’s credit rating hostage. “That would be a financial disaster, not only for us, but for the worldwide economy,” Boehner said on “Fox News Sunday” of the risk of default. “I don’t think it’s a question that’s even on the table.”

Fresh off a last-minute deal to avert the so-called “fiscal cliff,” the combination of spending cuts and tax increases that was supposed to take effect at the beginning of the year, Congress now has another fiscal issue at hand: the nation hit its borrowing limit on New Year’s Eve, and the debt ceiling needs to be increased to avoid a default that would have catastrophic economic consequences.

Republicans are already promising a repeat of the summer 2011 fight that nearly led to such a default (and ultimately created the fiscal cliff). Senate Republicans have promised to hold the debt limit hostage for spending cuts, and House Speaker John Boehner’s (R-OH) office has indicated similar intentions. “If they want to get the debt limit raised, they are going to have to engage and accept that reality,” Brendan Buck, a spokesperson for Boehner, said of spending cuts.

But in the winter of 2011, before he led the GOP into the fight that caused the first credit downgrade in American history, increased borrowing costs, and nearly led to a default, Boehner proved that he knew the consequences of not raising the debt limit: it would cause “financial disaster” for the entire world:

Boehner said it would mean “financial disaster” for the global economy if Congress were unable to come to a deal to raise the debt ceiling this spring.

“That would be a financial disaster, not only for us, but for the worldwide economy,” Boehner said on “Fox News Sunday” of the risk of default. “I don’t think it’s a question that’s even on the table.”

Before 2011, raising the debt ceiling was a matter of course, one the minority party often used to embarrass the president before it ultimately allowed the increase. The current crop of Republican leaders voted repeatedly to raise the debt limit under President Bush. Only now have Republicans begun to insist on spending cuts equal to the amount of the debt increase, a policy that is hardly sensible, since the debt limit simply grants the U.S. Treasury the authority to borrow to pay the debts Congress has already accrued and does not authorize new spending. Failure to grant Treasury that authority, as Rep. Jeff Flake (R-AZ) said in 2002, would be “like eating a big meal and walking out on the bill,” except that walking out on this bill, as Boehner himself said, would cause a global financial catastrophe. (HT Greg Sargent)

Several Republican senators have recently said that they intend to take the federal debt limit — and thus the creditworthiness of the nation — hostage in order to force Democrats and President Obama to accept cuts to critical federal programs, including Social Security and Medicare. “Before we vote again to address the debt ceiling — even though it may be at great political cost — we’ve got to address spending, and that means entitlements,” said Sen. John McCain (R-AZ).

Failure to raise the debt ceiling — which merely confirms that the nation will pay for spending already approved by Congress — would have catastrophic consequences for the economy. But Senate Minority Leader Mitch McConnell (R-KY) is clearly on board with taking it hostage, pushing Republicans to “seize” this “immediate opportunity”:

But in the upcoming months, we will have the opportunity to put our country back on sound financial footing—and there’s no excuse not to seize it. The President claims to want a balanced approach to solve our problems. And now that he has the tax rates he wants, his calls for ‘balance’ mean he must join us in our efforts to achieve meaningful spending and government reform. We have an immediate opportunity to act: the debt ceiling.

But a “balanced” deal would require much more revenue that that included in the deal to avert the so-called “fiscal cliff.” While that deal raises about $620 billion, spending cuts enacted last year total about $1.5 trillion, a 2.5 to 1 ratio of programmatic spending cuts to revenue. Adding in savings from interest payments on the debt moves the ratio to 3 to 1.

Despite these numbers, McConnell is urging Republicans to take the creditworthiness of the entire country hostage to gut programs upon which millions of Americans depend. Failing to raise the debt ceiling would cause a bigger economic contraction than that experienced during the depths of the Great Recession.

In an interview Monday, Sen. John McCain (R-AZ) confirmed that Congressional Republicans plan again to use the upcoming debt limit to hold the nation hostage to their demands for massive cuts to Medicare and Social Security. His comments echoed earlier remarks by Sen. Lindsay Graham (R-SC) and anti-government activist Grover Norquist.

Raising the debt ceiling does not mean spending more money — it merely allows the administration to take out the necessary debt to pay for the spending already authorized by Congress and the interest on the debt that has already been approved by Congresses past. While the nation reached the current debt limit yesterday, the Department of the Treasury is using accounting measures to keep the government from default for the next couple of months.

But McCain told CNN that Republicans would again block legislation to keep the nation from defaulting on its obligations, unless they can force major cuts to vital entitlement programs — even though doing so would be highly unpopular:

WOLF BLITZER (HOST): Are you going to use the raising of the debt ceiling in February or March, Senator McCain, as leverage to get what you want from the president?

McCAIN: I think there’s gonna be a whole new field of battle [laughs] when the debt ceiling rolls around. Most of us have pledged that we’re gonna have to… before we vote again to address the debt ceiling — even though it may be at great political cost — we’ve got to address spending, and that means entitlements. We’ve got to sit down together and get us back on a path… look, we just added, what was it, $2.1 trillion in the last increase in the debt ceiling, and spending continues to go up. I think there’s gonna be a pretty big showdown the next time around when we go to the debt [limit].

Watch the video:

Ironically, McCain was among those most critical of phantom Medicare “cuts” in the Obamacare legislation, calling reductions in the program “a price that Americans should not be asked to pay.”

But now, McCain and other Republicans are making it clear: either programs protecting the health and financial solvency of American seniors must be significantly cut — or they will thrust the nation into an economic calamity unheard of since the Great Depression.

Although official Washington is currently fixated on the so-called “Fiscal Cliff,” the biggest threat to American prosperity is the debt ceiling, which must be raised in February to prevent economic catastrophe. If Republicans refuse to reach a deal on the so-called cliff, the Congressional Budget Office predicts that they will spark a new recession in 2013. But if Republicans block action on the debt ceiling, they will make that potential recession look quaint. Without raising the debt ceiling, the United States will be forced to embrace austerity so severe it will lead to “a bigger GDP drop than that experienced during the Great Recession of 2008.”

But in an interview on Fox News Sunday this morning, Sen. Lindsey Graham (R-SC) threatened to oppose this must-pass bill unless Social Security benefits are taken away from millions of future retirees:

I’m not going to raise the debt ceiling unless we get serious about keeping the country from becoming Greece, saving Social Security and Medicare [sic]. So here’s what i would like: meaningful entitlement reform — not to turn Social Security into private accounts, not to take a voucher approach to Medicare — but, adjust the age for Social Security, CPI changes and means testing and look beyond the ten-year window. I cannot in good conscience raise the debt ceiling without addressing the long term debt problems of this country and I will not.

Watch it:

This is extortion, plain and simple. It is the budgetary equivalent of threatening to break America’s legs unless Congress agrees to break the backs of millions poised on the edge of retirement. Graham’s position is that seniors should have to wait longer for their retirement benefits — even if they work in physically demanding jobs that literally tear the body apart by the time a worker reaches age 65 — and that those benefits should be reduced in the future.

And if Congress won’t agree to this deal, then Graham is prepared to thrust the nation into an economic calamity unheard of since the Great Depression.