Republican Insanity Continues Unabated Following Fiscal Cliff Agreement

Crazy John Cornyn

Have you heard the latest from Texas Sen. John Cornyn? This morning the Houston Chronicle published Cornyn’s bizarre op-ed in which he calls for a “partial government shutdown” if President Obama refuses to come to Republicans on bended knee with a plan to cut Social Security, Medicare, and Medicaid in return for Congress agreeing to raise the debt ceiling.

Over the next few months, we will reach deadlines related to the debt ceiling, the sequester and the continuing appropriations resolution that has funded federal operations since October. If history is any guide, President Obama won’t see fit to engage congressional Republicans until the 11th hour. In fact, he has already signaled an unwillingness to negotiate over the debt ceiling. This is unacceptable. The president should immediately put forward a plan that addresses these deadlines, and he should launch serious, transparent budget negotiations.

The biggest fiscal problem in Washington is excessive spending, not insufficient taxation. Tax cuts didn’t cause this problem, so tax increases won’t solve it. If we don’t reduce spending and reform our three biggest entitlement programs – Medicare, Medicaid and Social Security – then we will strangle economic growth, destroy jobs and reduce our standard of living. With the national debt above $16 trillion, and with more than $100 trillion in unfunded liabilities hanging over us, our toughest fiscal decisions cannot be postponed any longer.

Excuse me? Tax cuts didn’t cause the problem? The Bush tax cuts, combined with two interminable wars that Republicans allowed President Bush to exempt from inclusion in the budget certainly did lead to our fiscal crisis–with a lot of help from banksters. If Republicans want to “reform” the big three safety net programs, nothing is stopping them from coming forward with their own list of specific cuts. The President doesn’t have the power of the purse after all, Congress does. Back to Cornyn’s moronic screed:

Republicans are more determined than ever to implement the spending cuts and structural entitlement reforms that are needed to secure the long-term fiscal integrity of our country.

The coming deadlines will be the next flashpoints in our ongoing fight to bring fiscal sanity to Washington. It may be necessary to partially shut down the government in order to secure the long-term fiscal well being of our country, rather than plod along the path of Greece, Italy and Spain. President Obama needs to take note of this reality and put forward a plan to avoid it immediately.

WTF?!! Cornyn doesn’t seem to understand what failing to raise the debt ceiling would mean. Congress has already approved borrowing for expenditures that must be paid for. We’ve already reached the debt limit, we’re way beyond fixing our problems with a government shutdown. Of course Cornyn doesn’t explain what he means by that anyway, but I’m guessing he wants to stop Social Security checks and Medicare and Medicaid payments. Whatever, what he has written makes no sense.

Yglesias responds to Cornyn’s “outrageous op-ed.”

What he’s missing here is that the path he’s advocating is much worse than anything that’s happened in Italy or Spain. He proposing that the federal government simply default on payment it’s obligated to make.

We have had, in the past, episodes that have been called government shut-downs. What’s happened in those cases is that no new appropriation bill has been passed authorizing many branches of the federal government to operate. Absent an appropriation, there’s no legal basis for the government programs to be administered and so they aren’t administered. Then congress appropriates new money and things come back.

What Cornyn is talking about is something else. He’s talking about the government not paying bills that it’s already obliged to pay. Social Security and Medicare exist. Bondholders are owed interest payments. State and local governments have submitted paperwork to get their grants. Veterans are owed benefits. Contractors have agreed to do work. Congress has passed the appropriations bills. But if the debt ceiling isn’t raised, the Treasury won’t have the money to pay the bills it has to pay. The result won’t be a “shutdown” of government functions; it’ll be a deadbeat federal government. Some people won’t get money they’re legally entitled to. But who won’t be paid? And who will decide who won’t be paid? Does the Secretary of the Treasury just arbitrarily get to decide that bondholders and residents of blue states get paid, but there are no Social Security benefits for Texans? Can Obama dock Cornyn’s pay but not Chuck Schumer’s? Certainly there’s no legal authority for that kind of prioritization, but what’s Obama supposed to do if congress tries to prevent him from spending money that he’s legally obliged to spend.

As Dakinikat has already made abundantly clear to us in numerous posts, the U.S. is not in the same or similar position as Greece, because, for one thing, we can print our own money. Here’s just the latest from Dak on this point.

What we really need is a recovery. That will not happen with all the fiscal policies being placed on the table right now. Let’s review one simple thing. As long as you have a good currency, federal debt instruments in demand, and a vast array of taxable assets in your country, there is no such thing as a ‘bankrupt’ government or excessive debt.

Jamie Bouie discusses government shutdowns:

A government shutdown occurs when Congress fails to pass an appropriations bill. Without appropriations, the federal government lacks the authority to operate, and so it doesn’t. Agencies close, workers go home, programs are suspended, and nothing goes on for as long as Congress is at an impasse. This is what happened in 1995, when the Gingrich-led House forced a shutdown, and this is what almost happened at the beginning of 2011, when Boehner led his conference to a similar position.

This isn’t on the table. Rather, Cornyn is referring to the debt ceiling, which is a congressional limit on the Treasury’s ability to pay obligations. If Congress fails to raise the debt ceiling, the government will continue to function, it just won’t pay the people its promised to compensate. Social Security checks won’t go out to retirees, Medicare and Medicaid reimbursements won’t go out to hospitals, payments won’t go out to military contractors, and federal workers will receive an I.O.U for paychecks.

This is why its so dangerous for Republicans to refuse to raise the debt ceiling. Contra Cornyn, keeping the limit low won’t reduce deficits or stop the United States from accumulating debt; instead, it will keep the federal government from paying what it owes to a variety of people and organizations, from bondholders to pensioners. When you stop making payments on your mortgage, the bank comes to take your house. When the government of the world’s largest economy stops making payments on its obligations, financial markets spin into a panic.

In 2011, the mere threat of not raising the debt ceiling was enough to slow economic growth to a crawl, and nearly erase the gains of the previous months. Put another way, what Cornyn has signaled—along with most of the Republican Party—is a willingness to crash the economy and damage the full faith and credit of the United States if President Obama doesn’t adopt core parts of the conservative agenda.

Cornyn isn’t alone in his insane tactics. This morning, John Boehner claimed in a “closed door meeting” with House Republicans that Americans support Republicans’ threats to bring down the national–and likely global–economies in return for allowing the Treasury to pay our debts.

“With the [fiscal] cliff behind us, the focus turns to spending,” Boehner said, according to a person in the room. “The president says he isn’t going to have a debate with us over the debt ceiling. He also says he’s not going to cut spending along with the debt limit hike.”

The Speaker cited a new poll conducted just before the New Year by the Winston Group, a Republican firm, which found that 72 percent of respondents “agree any increase in the nation’s debt limit must be accompanied by spending cuts and reforms of a greater amount.”

Boehner first laid out that principle in a 2011 speech in New York, and he has said he will stick to it as Congress debates the debt ceiling in the next two months. The Treasury Department said the nation hit its $16.4 trillion borrowing limit in late December and estimates the next increase must occur before March.

And Lindsay Graham made similar demands a few days ago.

Graham said he anticipates forcing Democrats to give in on a long list of the GOP’s top spending priorities in the new year: raising the eligibility age for Medicare, increasing premiums for its wealthier beneficiaries, and trimming Social Security benefits by using a new method to calculate inflation.

“I think if we insist on changes like that, we’ll get them,” he said.

At the Atlantic, Elizabeth Reeve notes that Republicans have embraced the label “hostage takers” and are taking pride in their claimed willingness to drive the country and the world into economic chaos.

Conservatives did not always advocate so openly that Republican lawmakers be really and willing to risk the full faith and credit of the United States, nor did they say this is what Republican lawmakers wanted to do. In August 2011, New York Times conservative columnist Ross Douthat put hostage-taking in scare quotes, and noted, “it’s an odd sort of hostage situation when the hostage seems to want to be there,” arguing that Democrats always negotiate on taxes. Today, the change is not just that conservatives are embracing this liberal talking point as their own. It’s that they’re doing it completely cynically. In 2011, you had some people — Michele Bachmann, for instance, at least claim that failing to raise the debt limit wouldn’t be so bad. “I’ve been in Washington for a long time, and I’ve seen smoke and mirrors time and time again,” Bachmann said in June 2011, calling the talk of the economic damage from a default “scare tactics.” The next month, she shrugged, “As we debate the debt ceiling, the players seem to have lost all sense of proportion.” This was widely viewed as crazy. In 2013, conservatives are not making the claim that failing to raise the debt limit would have few negative consequences. Instead, they’re just urging Republicans to use the crazy.

Today, the problem is not the political costs, but the lack of Republican unity to hold out for a great deal. “At some point we have to be serious about this,” Chocola told Newsmax. “At some point, Republicans have to do what Republicans say they have to do — and they have to stand up for limited government, spending restraint, and fiscal responsibility.” It’s not that the GOP has too many hostage-taking Bachmanns. It’s that it doesn’t have enough of them.

Unfortunately, as Greg Sargent reports, the corporate media seems to be buying into the “GOP debt ceiling spin.”

The early returns, based on the coverage of this looming battle so far, suggest Republicans are successfully defining the terms of this debate — they are defining it as a standard Washington standoff, in which each side will demand concessions from the other. Indeed, you can read through reams of the coverage without learning three basic facts about this fight:

1) Republican leaders will ultimately agree to raise the debt ceiling, and they know it, because they themselves have previously admitted that not doing so will badly damage the economy.

2) Because of the above, a hike in the debt ceiling is not something that Democratic leaders want and that Republican leaders don’t. In other words, it is not a typical bargaining chip in negotiations, in the way spending cuts (which Republicans want and Dems don’t) or tax hikes (which Dems want and Republicans don’t) are.

3) And so, if and when Republicans do agree to raise the debt ceiling, it will not constitute any kind of concession on their part — even though they will continue to portray it as such to demand concessions in return. It will only constitute Republicans agreeing not to damage the whole country, which does not constitute (one hopes) them making a sacrifice.

President Obama has stated that he will not negotiate with Republicans over the debt ceiling, only over a balance between increased revenues and spending cuts. Who knows whether he’ll stand firm or not? We can only hope that he will use every bit of the power of the bully pulpit to educate the American electorate about the consequences of failure to raise the debt ceiling. He can do it in the State of the Union and Inaugural addresses and he can continue traveling around the country explaining what the Republicans are up to. This might be a good time to hire Bill Clinton as official “explainer in chief.”

Regardless of what happens, this is certainly going to be a fascinating, though nerve-wracking fight to watch.