October 7, 2013 6:39 pm
Default is defeat for Republicans
Speaker Boehner must save his country from his party
What to do about the lemming wing of the Republican party? As the deadline for a US default inches closer, some hope the showdown will create a split that would convert the Tea Party into a southern rump – never to threaten US creditworthiness again. Others say Republicans could be snapped back to their senses by a stinging defeat in next year’s midterm election. A few even say a US default this month is the only catharsis that would work – if Washington is in a perennial game of Russian roulette, better the gun goes off now than later. All of which is instructive. But it does nothing to fix the dilemma facing John Boehner, the Republican Speaker, who has the power to end this crisis at any time. Yet he knows if he voted with the Democrats, it could cost him the speakership.
ON THIS STORY
- US shutdown hits business funding options
- China and Japan warn US on default
- US consumer confidence hit by Washington shutdown
- White House rejects demands to negotiate on shutdown
- Moody’s optimistic US will not default
EDITORIAL
There are two reasons for Mr Boehner to do the right thing even if it earns him the Tea Party’s hatred. First, he should not want to go down in history as the first speaker to permit a US sovereign default. Nor does he want to be the one who helped turn Republicans into pariahs. The occasional US government shutdown is one thing. It is irritating but not catastrophic. Failure to uphold America’s full faith and credit is quite another. Mr Boehner’s unwillingness to stop it would earn him history’s obloquy.
If it comes to it – and it probably will – Mr Boehner should fall on his sword in defence of US national interest. There was a time when Republicans had a strong grasp of what that meant. One hopes Mr Boehner still does.
Second, President Barack Obama rightly refuses to negotiate. The longer the shutdown continues, the greater the risk it fuses with the debt ceiling and ignites. Mr Boehner will get no more concessions from Mr Obama two weeks from now than today. There is no sense in waiting until the last minute to lift the ceiling. It is possible the US could enter technical default for a few days without the markets viewing it as such. Nobody knows.
A 1,000 point drop in the Dow can solve most problems in Washington. In September 2008 a slightly smaller decline was enough to shake legislators from their refusal to approve the troubled asset relief programme. But it would be better for Mr Boehner not to find out. A key wing of his party is prepared to wreck America’s reputation as the bedrock of the global economy. They are Republicans in name only. For the sake of his party’s reputation, Mr Boehner should end the crisis now.
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In past years this was sometimes leavened by either a common outside foe, or some natural or economic disaster, or a realization that the current course would hurt future political fortunes. In the 30s, for example, some conservatives backed New Deal programs because they saw ruling classes being wiped out by the Bolsheviks in Europe - and didn't want that here.
Now, due to gerrymandering into ultra-safe districts and the fervent belief that the current President is the Devil incarnate, a large number of conservatives see a possible default as the lesser of two evils - or in some cases not an evil at all. They have built their own "isolation bubbles" so find their current course a bit more like the upward leg of a really exciting roller coaster.
At some point either the Speaker or the President have to act to save the country from these adolescents running about with loaded guns. I hope both have considered what those actions will be and are ready to pull the rug out from under the zealots in time.
What if it doesn;t happen? China will not be very happy. The US owes too much money to Eurasia. It's not sustainable. I wonder if some people in high places think it would serve the US better than kicking the can of debt further.
A free vote is not possible because of some party political law (which is not part of the Constitution or anything, but apparently unbreakable to the Republicans).
http://getwd50.blo...e-mad-as-hell.html
It is one or the other. It is their choice.
Secondly, as the editorial points out, the key issue is the debt ceiling - which is a nonsensical tool in any case. The debt is the result of earlier congressional budget decisions and should not in a rational world be treated as a separate, free-standing issue.
I'm not to try going over the arguments again, but the Republicans should realise that they have lost the media war on this issue - the world and (I hope) most of the American people understand that this GOP undemocratic intransigence is foolish and misguided.
And btw, what colour flag would you expect the FT to fly? It is the paper's house colour after all!!
What you say about Obama, whether true or false, is irrelevant. How can he negotiate with the House when the House hasn't voted and therefore has no position?
Will look at Niall Ferguson's article, but the debt ceiling is a separate issue from the rising US debt. There is no current debt 'crisis', but there are two crises: (a) gov't functioning and (b) potential default. Crisis= critical. While rising debt is unhealhy and needs resolution, it has not reached a 'critical' stage.
While it is legitimate for Republicans (and, I would hope, Democrats) to wish to address rising debt (this does not bother the NY Times or Paul Krugman whatsoever), it is foolish to damage the economic ship in which you are sailing.
I agree with the tenor of the article: Boehner should put his country before himself. How many American servicemen have been called in recent years to do just that?
Does China threaten to sell Treasuries big time?
Niall Ferguson has, using the Congressional Budget Office's projections, in the weekend edition of the Wall Street Journal ( Oct 4th) concisely articulated the problem and the solution, which is a realistic review and reduction in entitlement spending.
One can argue that the proportional deficit reduction should be weighted more heavily towards spending reductions, or more heavily weighted towards tax increases, but something must be done.
Just imagine the model that this would set for the future if the budget process became the mechanism for making laws (or unmaking laws in this case) that couldn't get passed any other way (i.e. without the threat of a government default).
I don't think the democrats have done enough to tackle the debt, but that's a far lesser crime that undermining the greatest democracy on the planet.
ACA is good law, no reason to use the budget as hostage to change it... that is truly undemocratic
Our fiscal policy is broken. Badly broken. We are borrowing $23,000+ per year per tax payer who actually pays any taxes. This bubble is bigger, much bigger than the housing crisis. Our reckless fiscal policy is grave and growing danger to our future, the global financial markets.