“Totally Self-Inflicted Damage”: US on Verge of Default as Pain From 16-Day Shutdown Spreads

The partial shutdown of the federal government has entered its 16th day, and the nation is now on the brink of a default as the government’s borrowing authority ends tomorrow. On Tuesday, Fitch Ratings warned it could cut the the U.S. government’s AAA debt rating if a deal to raise the debt limit is not reached. In a statement, Fitch said, “The prolonged negotiations over raising the debt ceiling … risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S.” The Senate appears to be moving closer to a deal to reopen the government and raise the debt limit, but the Republican-controlled House of Representatives failed twice Tuesday to produce its own plan. As lawmakers continue to debate a possible deal to reopen the government, the impact of the shutdown is being felt across the country. North Carolina has become the first state to halt its welfare program due to the shutdown. “It’s meant a lot of pain for a lot of Americans — infants that have lost support for nutrition, children that have been thrown out of Head Start, safety measures that are not taken because the weather buoys are no longer manned. The list can go on, and the effects accumulate each day,” says Robert Borosage, founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. He recently wrote an article for Reuters called “Tea Party Zealots Hold the Public Debate Hostage.” We are also joined by Amanda Terkel , senior political Reporter and politics managing editor at The Huffington Post.

TRANSCRIPT:

Amy Goodman: The partial shutdown of the federal government has entered its 16th day, and the nation is now on the brink of a default as the government’s borrowing authority ends tomorrow. On Tuesday, Fitch Ratings warned it could cut the U.S. government’AAA debt rating if a deal to raise the debt limit isn’t reached. In a statement, Fitch said, quote, “The prolonged negotiations over raising the debt ceiling … risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S.”

The Senate appears to move closer to a deal to reopen the government and raise the debt limit, but the Republican-controlled House of Representatives failed twice Tuesday to produce its own plan. This is House Speaker John Boehner.

House Speaker John Boehner: Listen, we’re working with our members on a way forward and to make sure that we provide fairness to the American people.

Reporter 1: Mr. Speaker, can you guarantee to the American people Congress will not go past the deadline and push us into default?

House Speaker John Boehner: Listen, I have made clear for months and months that the idea of default is wrong, and we shouldn’t get anywhere close to it.

Unidentified: Last question?

Reporter 2: Mr. Speaker, will there be a vote today on the plan?

Unidentified: Right here.

Reporter 3: Are you going to vote today on this plan that would make some changes to the Senate bill, reopen the government [inaudible]—

House Speaker John Boehner: We’re—we’re talking with our members on both sides of the aisle to try to find a way to move forward today.

Amy Goodman: House Speaker John Boehner has refused to allow the House to vote on the Senate plan. Meanwhile, the Senate appears to be close to reaching a deal to keep the government funded through January 15th and the debt limit extended until February 7th. Senate Majority Leader Harry Reid criticized House Republicans for failing to reach its own agreement.

Sen. Harry Reid: I know I speak for many of us, who have been working in good faith, when I say that we felt blindsided by the news from the House. But this isn’t the first time. Extremist Republicans in the House of Representatives are attempting to torpedo the Senate’s bipartisan progress with a bill that can’t pass the Senate—can’t pass the Senate and won’t pass the Senate.

Amy Goodman: As lawmakers continue to debate a possible deal to reopen the government, the impact of the shutdown is being felt across the country. North Carolina has become the first state to halt its welfare program due to the shutdown. Meanwhile, nearly a hundred veterans converged at the National World War II Memorial in Washington Tuesday to protest the shutdown, saying it could put more than 5.5 million servicemembers at risk of not receiving their monthly benefits by November 1st.

To talk more about the government shutdown and the possible default, we’re joined by two guests. Robert Borosage is the founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. He recently wrote a piece for Reuters called “Tea Party Zealots Hold the Public Debate Hostage.” We’re also joined by Amanda Terkel , senior political Reporter and politics managing editor at The Huffington Post.

We welcome you both to Democracy Now! Bob Borosage, let’s begin with you. What has this shutdown meant?

Robert Borosage: Well, it’s meant a lot of pain for a lot of Americans—infants that have lost support for nutrition, children that have been thrown out of Head Start, safety measures that are not taken because the weather buoys are no longer manned. The list can go on. And the effects accumulate each day. It’s hurt the economy dramatically, and that—those effects accumulate each day. It’s undermined our credibility globally. You know, it’s been a totally contrived and unnecessary crisis which has had real-world and horrible effects that are growing every day.

Amy Goodman: Amanda Terkel , you wrote a really piece for The Huffington Post about what gets shut down and what remains open. Can you give us some of the examples?

Amanda Terkel: Sure. Well, I think it’s been very frustrating to a lot of people that many Americans are feeling the effects of the shutdown while many members of Congress who caused the shutdown aren’t feeling those same effects. So, Congress, like federal agencies, is supposed to furlough its staff and keep only essential personnel, but there are at least 10 senators and dozens of House members who haven’t furloughed a single member of their staff. And some of these people are like Senator Tom Coburn, who’s always railing about how there’s all this waste in government and all this wasted taxpayer money, yet every single one of his staff is essential.

Congress has kept its gym open, the gym for members. The gym for staff has been closed, but the gym for members is open. And then even there’s a little subway in the bottom of the Capitol so that members don’t have to walk a few hundred feet to get from the Capitol to the House and Senate office buildings, and that little train takes someone to run it. That train is still running.

Amy Goodman: So you have people like Steve King of Iowa, one of the die-hards against any kind of—any kind of agreement, kept his entire staff. But you talk about Nobel Prize-winning scientists furloughed.

Amanda Terkel: Right, exactly. I think—I believe there are five Nobel Prize-winning scientists who work for the government and who have been furloughed. There’s one man who’s a physicist who said, “You know, I guess that even if you win a Nobel Prize, you’re not considered essential.” There’s the man who kind of—who developed the Mars Curiosity rover; he’s been furloughed. And 96 percent of the Environmental Protection Agency staff has been furloughed. And cleanup at—I think it’s something like over 500 toxic Superfund sites, that has stopped, yet every single member of Steve King’s staff, they’re essential.

Amy Goodman: So the gym remains open. Head Start was not funded, except for a private foundation gave $10 million. What about day care for congressmembers—meaning their children, of course.

Amanda Terkel: That’s a good question. I’m actually not sure about that, although I know for federal agencies a lot of these day cares were being shut down, which had many people worried. They—if they, for example, weren’t furloughed, they’re still having to go to work, but now they can’t get day care, because that’s not considered an essential service. And many private day cares, too, are suffering, as well, because they are used to having all of these students coming in, and now the parents are home, they’re furloughed, they don’t need the use of this day care.

And so, I think, you know, it’s important that this isn’t just affecting people who work for government or who rely on government services, which is pretty much every American, but it’s also affecting many private businesses. Businesses who rely on tourism and who are around national parks are seeing a drop—restaurants, shops, you know, if you run a canoeing service in a national park. So this is really rippling all across all sectors of society.

Robert Borosage: You know, Amy, it’s putting a little focus—

Amy Goodman: Bob Borosage.

Robert Borosage: —a little focus on the people who work for us—federal employees—because they’ve taken the biggest hit. Eight hundred thousand employees have been furloughed. That means they are sent home without pay. If you’re an essential worker, you are required to work without pay. So you pay the costs of getting to work. You pay the costs of buying your lunch or whatever you do to eat during the day, and you’re not getting pay. We’re headed into our third week of these workers forced to work in, in essence, indentured servitude, without pay. And, you know, people tend to be cynical about bureaucrats in Washington, etc., but these employees are people who work for us, they provide services that go to us, and we are abusing them. And there’s no question that the best of them are going to start looking for different jobs.

Amy Goodman: Bloomberg has piece, “Troops Forage for Food While Golfers Play On in Shutdown.” “Grocery stores on Army bases in the U.S. are closed. The golf course at Andrews Air Force base is open.” Yes, so who is essential, and who isn’t? Now, the way the tea party congressmembers are talking about it is each thing that’s essential, they can vote on, if you want that particular thing to be open. This is certainly a way of, you know, shrinking the government to the size of a bathtub. Your thoughts on that, Bob Borosage, and then what it means moving from the partial shutdown to the deadline tomorrow, October 17th?

Robert Borosage: Well, this is—this is an example of why you shouldn’t let children play with bombs. The tea party congresspeople set out to shut down the government and threaten default on America’s debts, in order to get “Obamacare” either defunded or delayed. And when the president sensibly called their bluff and said, “Look, we’re not going to negotiate with a pistol to our head,” they have gone—proceeded to go into the shutdown and celebrate it, despite the damage it’s doing to people and to the economy. And now we’re headed into what is unimaginable, which has not been done before: a potential default on America’s debts.

It’s important for people to understand, these are debts that every Republican member in the House, including the tea party members, voted for as part of their budget resolution. So we’re talking about lifting the debt ceiling to cover debts that they supported, to pay the debts that they ran up, and they’re refusing to do that. And we really don’t know what happens if America defaults on its debt. The entire global financial system depends on the security of American bonds. And if they become less secure, if interest rates spike, as they are likely to do, if investors can’t count on them as the equivalent of cash, then you’re talking not about a small slowdown, you’re talking about a multitrillion-dollar house of financial cards that is going to be shaken at its root.

Amy Goodman: We’re going to break and then come back to this discussion. We’re talking to Bob Borosage and to Amanda Terkel —Amanda Terkel The Huffington Post, Bob Borosage with Institute for America’s Future. Stay with us.