Don't Fumble the Debt Ceiling

Republicans haven't gone wobbly on the debt ceiling debate, but in the House they are laying a trap for themselves that will leave them holding the bag for any downgrade or default on America's sovereign debt.

President Obama, as he indicated Friday, still demands that significant tax hikes be a part of any debt ceiling deal. But as Senate Minority Leader Mitch McConnell said on Thursday, "Republicans will not be reduced to being the tax collectors for the Obama economy... We won't be seduced into calling a bad deal a good one." So far, so good.

But there's a lot of loose Republican talk -- magnified a hundredfold by the media -- that we shouldn't worry about a default. That plays into Obama's hand. He's perfectly willing to drive our economy into a downgrade or a default as long as he can blame it on Republicans. Conservatives mustn't position themselves as fiscal "dead-enders." They have to force Obama to avert these disasters on their terms, and they can.

The threatened downgrade will make more costly all direct U.S. borrowing immediately and indirect borrowing (such as guaranteed mortgages) soon after. The interest we'll have to pay on government debt will rise -- perhaps dramatically -- adding tens or hundreds of billions to the national debt. The value of the dollar will be reduced by inflation causing accelerated borrowing and increased unemployment. If there's a default, even for a day, it will wreak havoc in our economy for many years to come.

To all my friends among the House members, please take a moment to think about how the public sees you. Don't ask each other or your political consultants. Ask some people back home. You're still seen as principled conservatives, but

I have yet to hear Obama say he’s in favor of a tax increase.

He keeps talking about “revenues” being part of the mix of the solution, but not “taxes”.

He expects to get trillions of revenue by doing away with the depreciation allowance for corporate jets. The reason we have so much debt is because of corporate jets. Or so you would think from listening to the president.

The great problem with Republicans is that, taken as a whole, they do not have the courage of any convictions...so they always fall back on simplistic textbook politics when the road gets rough.

The Democrats do have the courage of their convictions, it is just that their convictions are geared toward complete corruption and preservation of their own position of power in an oligarchy at all costs.

“The threatened downgrade will make more costly all direct U.S. borrowing immediately “

That’s not just stupid it’s ridiculous.
Unless we raise the ceiling.

T-Bills will become more valuable when we issue less of them.
They may even have a temporary negative yield from scarcity.
It doesn’t matter what Moody’s says- when people want a guaranteed safe investment there’s only one.

I wonder what the fed will do with it’s money when T-bills aren’t available. Nothing good I’m sure...

The article is complete garbage.

The Old Guard Republican Establishment is using all of their allies in the media — including the American Spectator, Larry Kudlow on National Review, Ann Coulter as a guest on Fox News, etc — to pressure the young reformers to cave and vote for the absurd McComnell Surrender plan.

The Old Guard is reponsible for getting the country into this mess and they are continuing their inept, slimy ways. The Republican leadership has already given up their bargaining power by publicly declaring the McConnell Surrender plan to be their backup plan, letting the Democrats know that they don’t need to agree to anything more than that.

This is a crucial test on whether the Old Guard can compromise the integrity and principles of the reformers, and co-opt them into the club of politics as usual. This is a test on whether have any real hope of fixing this country.

The reformers need to take over. The first thing they need to do is get their bargaining power back. They need to reject the McConnell plan completely and they need to let the nation know they are rejecting it by taking a pledge against it.

Then they need to turn the debate around on the Democrats and let the Democrats choose between two alternatives. Let the Senate Democrats decide, in the end, if they want to reject Cut, Cap and Balance, a real plan to fix the real long -term problems of this country, or as the only alternative, they are willing to risk the consequences of not raising the debt ceiling.

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