THE BLOG
04/26/2011 12:37 pm ET | Updated Jun 26, 2011

Weekly Audit: Hostage-Taking Over the Debt Ceiling

By Lindsay
Beyerstein, Media Consortium blogger

The latest contrived showdown
between Congressional Republicans and the White House is over what
concessions the GOP will demand in order to increase the federal debt
ceiling.

George Zornick of The Nation explains how href="http://bit.ly/i7kATo">the shakedown works:

Congress now needs to approve any borrowing past the $14.3
trillion debt ceiling, which the United States will reach "no later" than
May 16, according to Treasury Secretary Timothy Geithner. If Congress
doesn't raise the debt ceiling, the government would have to stop
spending--including stopping interest payments on those Treasury bonds,
meaning that the United States would effectively default on its
debt.

The debt ceiling has to be raised and everyone
knows it. Surely the Republicans knew it when they voted for tax cuts for
the rich with borrowed money. If the debt ceiling is not raised, the
United States will default on some of its obligations. Just like what
happens after you miss a credit card payment, the country's creditors will
demand higher interest in order to lend to us in the future.

Playing chicken with the debt ceiling is a recipe for increasing the
national debt. Paul Waldman argues in The American Prospect that
the Republicans hate government so much that they are willing to href="http://bit.ly/eaIwee ">declare war on the economy in a quixotic
bid to smash the state:

The reason we're now seeing an
unprecedented amount of attention paid to a vote that ordinarily passes
with little notice is that the Republican Party's agenda is being set by
a group of ideological radicals who seem quite willing to cripple the
American economy if that's what it takes to strike a blow against the
government they hate so much.

Peak
Crazy

At AlterNet, Joshua Holland explains why failure to
raise the debt ceiling would be an economic
catastrophe
that could jeopardize the economic recovery. "Peak Crazy,"
he calls it.

However, Holland notes that a showdown over the debt
ceiling does not risk an immediate government shutdown, like the one we
faced over the budget battle. Borrowing isn't the only way that government
agencies are funded. The government could still spend the $150 billion or
so it takes in every month in tax revenue, for example.

Yet, Senate
Minority Leader Mitch McConnell (R-Kentucky) has announced that 47 GOP
senators oppose raising the debt ceiling unless "credible attempts" are
made to cut federal spending. Meanwhile the Tea Party is launching an
all-out lobbying effort to urge House Republicans not to raise the debt
ceiling without major spending cuts.

The Tea Party's wish list
includes some total pipe dreams like a balanced budget amendment to the
constitution, and a law to require a two-thirds majority for all future
tax increases. Former senator and current U.S. presidential hopeful Rick
Santorum cheerfully announced that he would let the United States default
on its debt if health care reform is not repealed. Rep. Michele Bachmann
(R-Minn) helpfully suggests paying the interest on Treasury Bills using
money that would otherwise go to Social Security.

Shoot the
hostage

Cenk Uygur of the Young Turks argues that
Democrats are panicking needlessly and, once again, offering href="http://bit.ly/fg0c3x">needless preemptive concessions to the
Republican fringe in the form of a proposed "hard cap" on government
spending, which would cap new government spending, and subtract any
overruns from social welfare programs like Medicare and Social
Security.

The truth, Uygur notes, is that Wall Street has already
told the Republicans in no uncertain terms that the debt ceiling will be
raised. The economic consequences of doing anything else would be
unthinkable. The Tea Party can yell and scream, but the adults have
already made the decision. Knowing this, Democrats should not be trying to
placate the Republicans so as to induce them to do something they will
ultimately end up doing.

Digby on Social
Security

Democrats are wavering in their decades-long
commitment to defend Social Security,
Heather Digby Parton (a.k.a., "Digby") writes in In These
Times:

In a quixotic attempt to fix the problems
in the current economy without confronting the plutocrats, the Democrats
are using the illogical argument that since Social Security is projected
to have a shortfall in 35 years, we must cut benefits now. And they seek
to prove to "the market" that the government is fiscally responsible by
showing it's willing to inflict pain on its citizens--in the
future.

Even if we do nothing, Social Security can pay
out full benefits for the next 35 years. There is no crisis. A small
increase on the payroll cap on Social Security could shore up the program
for generations to come. Republicans oppose Social Security because they
are ideologically opposed to social welfare programs, not because Social
Security is broken.

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