On Friday, the fourth day of the first government shutdown since the time when cell phones weren’t everywhere and Bob Dole was a presidential candidate, there was momentary cause for hope. A definite sense was in the air that House Speaker Boehner and his radical Republican puppeteers had wildly overplayed their hand in their seemingly quixotic attempt to obliterate the Affordable Care Act. They were being pilloried by every news media outlet not owned by Australian fascists, the poll numbers were savagely against them and getting worse, and even their own hardcore shut-it-down congressional representatives couldn’t explain with any coherence what it was they were trying to accomplish.
The fifth paragraph of that day’s lead New York Times story told the tale: “They are only trying to survive another day, Republican strategists say, hoping to maintain unity as long as possible so that when the Republican position collapses, they can capitulate on two issues at once – financing the government and raising the debt ceiling – and head off any internal party backlash. Republican lawmakers say Mr. Boehner has assured them privately that he will not permit a default.”
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It doesn’t get much more straightforward than that, and the line about Boehner assuring everyone that default lay nowhere in the cards was a soothing balm. Those of us tuned into every little detail of this ongoing debacle read that, relaxed a micromillimeter, and enjoyed the first half of the weekend…until Sunday morning, when the mood turned on a dime after Speaker Boehner did a convincingly defiant doomsday aria on the ABC show “This Week.”
“We’re not going to pass a clean debt limit increase,” said Boehner. “I told the president, there’s no way we’re going to pass one. The votes are not in the House to pass a clean debt limit. And the president is risking default by not having a conversation with us. I don’t want the United States to default on its debt. But I’m not going to raise the debt limit without a serious conversation about dealing with problems that are driving the debt up.”
It was a screeeeeeech needle-off-the-record moment, and all of a sudden, the people who had been blowing this whole thing off as a bunch of bad noise from the Congressional Theatrics Club began to worry, and worry deeply, for the first time.
On Monday morning, a variety of news outlets reported that banks were stuffing extra cash into their ATMs in the event of a default. That, friends and neighbors, is what you call a canary in the coal mine, one dead-ass yellow bird right there on the ground for all to see.
Failure by the world’s largest borrower to pay its debt — unprecedented in modern history — will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.
Labeled technical or not, a default is still a default, said Jim Grant, founder of Grant’s Interest Rate Observer. “People have typically turned to Treasuries as a safe haven, but what will happen when they realize it’s not safe anymore,” said Grant, who has followed interest rates since the 1970s. “Financial markets are all confidence-based. If that confidence is shaken, you have disaster.”
“Nobody knows what would happen if there were a default because the reality is there’s never been even a technical default in the U.S.,” said Russ Koesterich, chief investment strategist at BlackRock Inc., the world’s largest asset manager. “Everyone’s flying blind.”
…and here we are, not just because John Boehner can’t control his caucus or because a few lunatics think leveraging the health of the world’s economy on a political argument is sensible conservatism, but because the planet suffers the existence of people like Senator Tom Coburn (R-OK), who doesn’t actually believe the debt ceiling even exists, because la la la la la la la he can’t hear you, so there.
Or is there more to it?
I have two theories on how the endgame of all this plays out, and both lead to the same place. First and foremost, if the Republicans in Congress are well and truly as deranged, disorganized and demented as they clearly appear to be, then that’s it. We’re going to blow the debt limit, shattering the global economy in one fell swoop, leading immediately to fire and brimstone coming down from the skies, rivers and seas boiling, forty years of darkness, earthquakes, volcanoes, the dead rising from the grave, human sacrifice, dogs and cats living together, and mass hysteria.
Or maybe, just maybe, they’re full of shit, and they know it, and they don’t want you to know it, so they tripled down on their crappy hand during a Sunday talk show loud enough to scare everyone within hearing distance into thinking they just might be crazy enough to do this thing, so give them what they want.
The GOP’s shutdown/default talking points pivoted away from defunding the ACA and towards “debt reduction” only scant nanoseconds after that Times story on Friday hit the racks. Ever since, right-wing publications like the National Review have been giving long, luxurious backrubs in print to the idea of folding the so-called “Grand Bargain” – screwing Social Security with a chained CPI, screwing Medicare with means testing, etc. – into the shutdown and debt limit negotiations. John Boehner doing a wild-eyed version of a hostage-taker in the movies who waves a gun and screams, “I’ll do it man don’t think I won’t do it now put the money in the bag,” fits cozily into this scenario.
They wanted to defund Obamacare, and they lost, and they know it. Now, thanks to the fact that they are frightening everyone, they want the prize they’ve been seeking since the days of Franklin Delano Roosevelt.
For the record: if the Obama administration, in its bottomless desire to Do Something Really Big And Bi-Partisan, actually goes and takes this bait, they should be brought up on three hundred million counts of negligent homicide, because they will have killed the country for all time.
I’m not saying they will – aside from a few piddling leaks from the endlessly useful “unnamed sources,” the administration has been hanging admirably tough to date – but if they do, it is the end of everything. They will have saved the Republican Party from destroying itself at a time when the nation and the world would be best served by a Republican Party that destroys itself, figures itself out, and gets its act back together again.
More importantly, the administration will have cemented the precedent that a small section of Congress can ransom the planet for political concessions. The last time we did this, the White House caved just enough to let Boehner and the GOP save face, and they took that lesson to heart, and that’s why we’re currently staring economic Armageddon so close in the face we can smell the sulphur and feel the heat.
If they are irredeemably crazy, we are going to default no matter what, which recommends against rewarding such behavior under any circumstances. If they are crazy like a fox, they want the administration to think they will allow a default in order to extract concessions like the so-called “Grand Bargain.”
This whole hot mess began with an attempt to defund or derail the Affordable Care Act, described by all and sundry as “President Obama’s most significant achievement.”
President Obama’s most significant achievement, his legacy for all time, will be facing down these cretins, holding the line against any and all concessions on elemental pieces of legislation like the budget and the debt limit, and ending the vile and vicious cycle of hostage politics that has done so much damage already.
If he doesn’t, well…that’s a legacy, too.