As Republicans squabble over shutting down the government and raising the nation’s borrowing limit, at least one conservative Congressman is suggesting that the U.S. would be better off by defaulting on its debt.
Speaking at a town hall in Orange Park, Florida, Rep. Ted Yoho (R-FL) — who recently made headlines for suggesting that the Affordable Care Act’s tanning tax is racist and questioning President Obama’s place of birth — argued that America’s credit rating would actually improve if the country refused to pay its bills and underwent a “major reset”:
I say, You know what, I know we need the money, and I’m gonna pay it, I’m just not paying you today, and we’ll pay you with interest, but we need to do a major reset and look at us internally, and say we can’t afford this …
… And so they say that would rock the market, capital would leave, the stock market would crash, interest rates would go up. I said, “Let me give you my feeling: Interest rates are gonna go up anyways. They went up the last time they raised the debt ceiling, interest rates went up … because we’re not dealing with the problem. We’re putting another Tylenol to the problem. And that’s not [an ad] for Tylenol.” So let’s just address the problem, and I think if we address it, I think the creditors that we owe money to around the world would say, “you know what, they’re getting their house in order.” And I think our credit rating would do better, if we did that than face the mass [sic] program we’ve been up to … There are several of us that we’re not raising the debt ceiling; don’t ask us. We don’t have a money problem, we have a spending problem.
For 50 years, Congress routinely increased the debt ceiling as needed, including seven times under President George W. Bush. But in 2011, Republicans decided the debt ceiling was “a hostage worth ransoming.” The brinksmanship caused the first-ever downgrade of the U.S. credit rating by Standard & Poor’s and cost the country a million jobs and $19 billion. A vote to raise the debt ceiling would pay for the spending Congress has already enacted and is not a determination of how much much the nation should spend or whether it will raise the money to pay for spending.
The Treasury Department has not yet said when the nation will hit its debt ceiling and has repeatedly moved back the deadline as a result of “lower spending levels and higher tax revenues.” Republican leaders, meanwhile, plan to hold the national debt ceiling increase hostage until President Obama agrees to mandatory spending cuts to Social Security, Medicare, and Medicaid.