Nonetheless, it’s important to pay attention because the national debt is getting more interesting by the moment. If you were told that a group of conspirators had devised a devilish plan to use the debt to undermine the international status of the United States and to simultaneously put millions of Americans at risk of poverty, wouldn’t you perk up? Naah! That’s just too farfetched.
Yes, it is. But Republicans and Tea Partiers in Congress, as well as some Republican presidential candidates, are exploiting the national debt, and the horrific scenario of U.S. financial default, to get their way in negotiations on the federal budget.
This situation arises because of an artificial crisis provoked by conservatives. Since 1939 there has been a legal limit on the size of the national debt. And each year Congress has raised the limit to allow the debt to climb. This year the Republicans, the majority in the House of Representatives, are refusing to raise the limit unless the Obama administration and Democrats accept monster cuts in government spending in the next federal budget.
Raising the limit, allows the government to sell more bonds and securities or to make other commitments to obtain revenue to meet its international and domestic obligations.
Freeze the limit and the U.S. defaults on its loans, abandons its fiscal responsibilities and becomes, in effect, a deadbeat country. As a consequence, the dollar will lose value, prices will go up, American companies will find it harder to sell their products abroad, and interest rates will climb so buying a car or house will become even more out of reach for many people. A deepening recession is likely.
This is the bargain Republicans are now putting on the table. Cut government programs to the bone in this year’s budget or watch as the U.S. becomes an international derelict.
Fact: No one thinks the debt should be ignored. Another fact: Republicans want everyone to believe that their strategy of draconian government cuts is the only option
Last week, Republican Eric Cantor, the House majority leader, walked out on budget and debt reduction negotiations with Vice President Biden and other leaders from both parties. This week, Republican Mitch McConnell, the senate minority leader, created a similar spectacle by declaring that current negotiations were dead.
We can now turn to Michelle Bachmann, the newly announced Republican presidential candidate, to clarify what’s going on here. This is what she says on her official website:
“Taxes are simply too high and American families have less money to spend on their priorities. Rather than taking money from the hands of the middle class to pay for a large, overbearing federal government, I believe in letting hard-working taxpayers keep more of what they earn… [We need] to repeal the estate tax, reduce capital gains taxes, repeal the alternative minimum tax (AMT), extend the adoption tax credit [so fewer women get abortions], and, make permanent other important tax relief passed by Congress in 2001 and 2003.”
Bachmann is wrong on most of these points. The U.S. has lower taxes on average than many other industrialized countries. And nearly all of the tax cuts or adjustments she praises will benefit the rich, not working and middle class citizens.
But Bachmann's comments hit the mark when she conveys Republican disdain for increased taxes. This option is simply not on the negotiating table. Nor are the elimination of tax loopholes for corporations and the rich or reductions in oil and agricultural subsidies.
All of these actions would increase government revenue and be a start toward closing the budget deficit and reducing the dreaded debt. But the Republicans would rather cut valued government programs. And if making their point requires taking a chance on default and economic devastation, so be it.
This is the posture of incendiaries, not responsible citizens.