The United States is again approaching its debt limit, though an improving economy and new revenues have pushed the deadline for when it will need to be raised as far back as October. And yet again, Republicans are pushing legislation that amounts to nothing more than a phony fix to the issue, a bill known as the Full Faith and Credit Act that will prioritize debt payments in a way that House Speaker John Boehner (R-OH) says “makes it clear to our bondholders that we’re going to meet our obligations.”

But such a plan makes it clear that the U.S. will meet only some of its obligations, leaving many Americans, including troops, veterans, and the elderly, out in the cold. Boehner doesn’t see that as a problem, he told Bloomberg TV last night:

COOK (Host): Doesn’t it mean as Democrats have suggested you’re basically choosing to pay China before U.S. troops?

BOEHNER: Listen. Those who have loaned us money, like in any other proceeding, if you will — court proceeding — the boldholders usually get paid first. Same thing here.

Worse yet, the Republican plan doesn’t allow the nation to avoid default. If the U.S. services its debt payments but still misses others, it is still defaulting on payments it is required to make. Since the bill only allows Treasury to make payments as it receives revenues, and the bulk of its payments are made at the beginning of the month even though revenues don’t come in until later, it would almost certainly be unable to meet at least some of its obligations.

When the GOP has considered similar plans before, Treasury officials have called it “unworkable.” Bipartisan analysts said it was “essentially impossible.” Failing to fulfill spending obligations would be “the first step to becoming a banana republic,” a Bush-era Treasury official said. Instead of inspiring confidence among investors, bondholders, and the American people, the legislation would zap it.

Far from preventing default, the Full Faith and Credit Act would essentially ensure it. That wouldn’t just put paying China ahead of senior citizens and members of the military — it would also hammer economic growth both in the United States and across the world. (HT Huffington Post)

House Speaker John Boehner (R-OH) sent a memo to his House Republican colleagues Thursday touting supposed successes the GOP has had this year, and he doing so he urged his caucus to continue their attempts to stave off a debt crisis economists say does not exist.

Boehner’s memo argues that Republicans have been successful in putting pressure on Democrats and President Obama to address the nation’s “soaring debt.” It then goes on to outline areas where the country is still struggling, with these two statements listed first:

The president hasn’t succeeded in getting his additional tax hikes – but the economy still isn’t growing as it should be growing.

The federal bureaucracy is spending less than it otherwise would – but the national debt continues to grow, crowding out investment and eroding confidence needed to support growth.

Those statements are intertwined more than Boehner realizes, since it is his party’s focus on the debt that is holding back the economy’s ability to grow “as it should be growing.” Government spending has plateaued in recent years because Washington has undertaken deep deficit reduction efforts, and spending on domestic programs will be at lower levels this year than it was in 2007, before the Great Recession began. Government spending typically drives economic recoveries, but this time it is actively hindering the recovery because of the budget cuts that have already been enacted.

Meanwhile, Boehner and Republicans like Rep. Paul Ryan (R-WI) continue to ignore those facts, arguing instead that debt is “crowding out investment…needed to support growth” and putting America on a path to a debt crisis. Economists, however, say neither of those statements is true. “The argument that heavy debt loads slow economic growth doesn’t hold a lot of water,” one told Bloomberg last week, with others adding that the U.S. faced little-to-no threat of a debt crisis in the future.

What the U.S. has instead is an unemployment crisis, one that Boehner acknowledges when he states that “the economy still isn’t growing as it should be growing.” The problem is that Boehner and his Republican colleagues keep supporting policies that will ensure that America’s road to economic recovery is far longer than it should be.

Right after the House of Representatives approved a Senate bill to avert a government shutdown, House Speaker John Boehner (R-OH) set the stage for another down-to-the-wire crisis that will threaten the nation’s economic growth. At his weekly press conference, Boehner indicated that Republicans would again demand spending cuts in exchange for raising the nation’s debt ceiling, which it is set to hit in May.

Boehner said Republicans would only raise the debt ceiling if they got an equal amount of spending cuts, the Huffington Post reports:

“Dollar for dollar is the plan,” Boehner told reporters, adding that there have been no major talks on the debt limit at this point.

“The president has been clear that he’s not going to address our entitlement crisis unless we’re willing to raise taxes. I think the tax issue has been resolved,” said Boehner. “So at this point then, I don’t know how we’re going to go forward.”

Boehner’s House of Representatives has created an atmosphere of perpetual crisis in Washington since the GOP took control in 2011. The GOP took the government to the brink of shutdown early in 2011 before nearly forcing a default by demanding spending cuts in exchange for a debt ceiling increase that summer. That fight set up sequestration, the automatic budget cuts that threatened to derail the economy at the beginning of 2013 before a last minute deal pushed them back to the beginning of March. Republicans failed to extract more cuts when the debt ceiling was temporarily extended in January, but Boehner is now seeking to make sure cuts happen in May — even though the U.S. has already cut more than $2 trillion in spending over the last three years.

Those cuts have hammered the economic recovery, as has the culture of crises Boehner and the GOP have created. The last debt ceiling fight increased borrowing costs and slowed down economic growth, but despite evidence that both the GOP’s fights and their preferred policies are harming the economy, Boehner insists on repeating the same mistakes. Raising the debt ceiling was never an issue for Boehner when George W. Bush was president, but the recent fights have proven so harmful that top policymakers like Federal Reserve Chairman Ben Bernanke are now calling for the permanent abolition of the debt limit.

The arrival of budget season has brought debt panic back to the Beltway. But President Obama threw cold water on the matter last week, telling ABC’s George Stephanopoulos that the United States does not face “immediate crisis in terms of debt.” And this morning, House Speaker John Boehner (R-OH) essentially told ABC’s Martha Raddatz he agrees with Obama, calling the debt crisis “looming,” but not “immediate.”

“We do not have an immediate debt crisis,” Boehner said on ABC News’s “This Week With George Stephanopoulos.” “But we all know that we have one looming. And we have — one looming — because we have entitlement programs that are not sustainable in their current form. They’re gonna go bankrupt.” [...]

“[President Obama's] point, as he went on to say in that interview, is that we don’t — we don’t really need to do anything at this point. And I would argue that we do need to do something,” said the House speaker.

Debt is already projected to remain at or below its current share of the economy for the next decade, and it’s good that Boehner is standing in agreement with the president on that point.

Unfortunately, the budget the House Republicans just released does not reflect this realization. It cuts all spending that isn’t Medicare, Social Security, or the military down to near-historic lows over the next ten years. America’s economy remains in the doldrums, leaving the unemployment rate at 7.7 percent (it has never been that high for that long since the Great Depression) and all the real-world evidence we have indicates that austerity in depressions cripples economic growth. If everyone agrees the debt crisis is not immediate, then job growth and economic revival should be topping deficit reduction on the country’s list of priorities.

Nor is there a great deal of evidence to back up Boehner’s distinction between an “immediate” and “looming” debt crisis. The long-term projections of mounting debt he and other D.C. lawmakers rely on are in fact riddled with dramatic assumptions and uncertainties about the future behavior of both Congress and the economy.

One of the most persistent myths amongst Republicans and conservatives is the notion that lower income tax rates, especially on the wealthy, are the key to restoring the economy. This morning on Meet the Press, when House Speaker John Boehner (R-OH) once again trotted out this claim, host David Gregory quite rightly responded that “there’s no iron-clad evidence that lowering marginal tax rates is going to lead to economic growth.”

Strikingly, the exchange began with Boehner making the very uncharacteristic — but entirely correct — point that “we can’t cut our way to prosperity,” and that we have to restore economic growth. As a way to do that, he cited the Republican plan to cut loopholes out of the tax code, and then use the extra fiscal room created by eliminating those deductions to lower tax rates. Gregory responded by pointing out that tax rate hikes under Presidents Reagan and Clinton corresponded with economic booms:

JOHN BOEHNER: We’ve got to find a way through our tax code to promote more economic growth in our country. We can do this by closing loopholes, bringing the rates down for all Americans, making the tax code fairer — it will promote more economic growth.

DAVID GREGORY: But there’s no iron-clad evidence that lowering marginal tax rates is going to lead to economic growth.

BOEHNER: Oh yes there is. There’s mountains…

GREGORY: Bill Clinton raised taxes. President Reagan raised taxes.

BOEHNER: There’s mountains of evidence that if we bring tax rates down, we will help spur economic growth in our country.

GREGORY: That hasn’t been tried before?

BOEHNER: Uh, yeah. Ronald Reagan. 1981. […]

GREGORY: But he raised taxes as well, and it didn’t hurt the economy, did it?

BOEHNER: Listen, he lowered taxes twice. Both in 1981 and again in the 1986 tax reform. When they lowered rates for all Americans, we had this boom in economic growth. Why? Because we got rid of a lot of the silly deductions, brought the rates down, and it helped promote more economic growth in our country.

Watch it:

In general, periods of high economic growth in America over the 20th Century actually occurred alongside much higher top marginal rates than we have now.

Gregory is even more correct than he realizes. One fact neither man brought up is that the 1981 tax cut occurred in conjunction with one of the biggest single cuts in interest rates the Federal Reserve has ever carried out.

By 1980, inflation had risen to nearly 15 percent. In response, Fed Chairman Paul Volcker raised the Federal Funds rate — which in turn drives interest rates throughout the economy — to an historic high of almost 20 percent. The gambit worked. Inflation has been at near-historic lows ever since, and Volcker cut interest rates back down to under 10 percent. Any economist worth their salt would agree that an interest rate hike of that magnitude will bring on a recession, and that a compoarable cut in interest rates will be a big boost to economic growth.
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Allowing sequestration to occur on March 1 will have a devastating impact on states, the White House warned Sunday, when it released state-specific reports detailing the effects of the automatic budget cuts. States will lose funding for education, job training, health care, and a plethora of other services, jeopardizing assistance for low-income and middle class families alike and threatening the economic recovery.

ThinkProgress examined the implications of the budget cuts on the five states represented by Republican leadership in the House and Senate. Those five states would lose a collective $206 million in education funding, jeopardizing nearly 3,000 teaching jobs and allowing them to serve 428,000 fewer students. While the impacts are particularly large for California and Texas, they would be felt across all five states, according to the White House fact sheets:

OHIO: House Speaker John Boehner’s state will lose $25.1 million in education funding, putting 350 teaching jobs at risk and allowing it to serve 34,000 fewer students and 100 fewer schools. 2,500 children will lose Head Start funding, 3,320 will lose assistance to help pay for college, and as many as 800 will lose access to child care. The loss of $1.7 million in job training and assistance funds will mean 57,000 fewer Ohioans get help from those programs. Ohio will also lose $823,000 in funding to help provide meals to seniors.

KENTUCKY: Sequestration will cost Senate Minority Leader Mitch McConnell’s home state $11.8 million in education funding, meaning it could lose 160 teaching jobs and serve 21,000 fewer students. More than 1,700 low-income students will lose assistance to help pay for college, and 1,100 will lose access to Head Start. More than 16,000 Kentuckians will lose job training and placement assistance when the state loses $478,000 in funding for those programs, and it will also receive $677,000 less to help provide meals to seniors.

VIRGINIA: Virginia, the home of House Majority Leader Eric Cantor, would lose $14 million in education funding, jeopardizing 190 teaching jobs and cutting funding for 40 schools and 14,000 students. 1,000 students would lose access to Head Start and 2,120 low-income students would lose funding to help finance college. Another 400 low-income children could lose access to child care assistance. The state will lose $348,000 in job search and placement assistance, allowing it to serve 18,390 fewer people. It will also lose $1.2 million in funding to help provide meals to seniors.

TEXAS: The home of Senate GOP Whip John Cornyn would lose $67.8 million in education funding, putting 930 teaching jobs at risk and cutting funding for 280 schools and 172,000 students. Another 4,800 students would lose access to Head Start and 2,300 would lose access to child care assistance. Texas would lose more than $2 million in funds for job search and placement assistance, meaning more than 83,000 people would lose assistance. Texas will also lose $3.5 million in funding to help provide meals to seniors.

CALIFORNIA: House GOP Whip Kevin McCarthy’s home state would lose $87.6 million in education funding, jeopardizing 1,210 teaching jobs and affecting funding for 320 schools and 187,000 students. More than 8,000 students would lose funding for Head Start, and 9,600 low-income students would lose funding to help pay for college. Another 2,000 families will lose child care assistance, while the loss of $3.3 million in funding for job search and placement assistance, affecting nearly 130,000 people. The state will also lose $5.4 million in funding to help provide meals to seniors.