The perception of U.S. credit quality would be permanently impacted. The faith in the U.S. Treasury is the closest thing we have to risk-free securities. Playing a game of chicken with the debt ceiling is the nuclear option ~ Calvin Sullivan, chief strategy officer of fixed-income capital markets at Morgan Keegan & Co, as quoted in the 1/29/2011 CNN Money article "Playing Chicken with the Debt Ceiling".
Recently I received (via email) a "very important letter" from editor-in-chief Joseph Farah of WorldNetDaily. The very important information Mr. Farah wanted to impart was something he referred to as the Republican's "secret weapon". Apparently Mr. Farah believes House Republicans can have their way and cut every single Democratic program they disagree with. In the letter Mr. Farah asked the following questions...
Q1: How would you like to defund Obamacare now?
Q2: How would you like to end subsidies for NPR and PBS this year?
Q3: How would you like to stop taxpayer funding of Planned Parenthood and dozens of other offensive and deadly programs even before Barack Obama leaves office?
How does Mr. Farah believe Republicans can accomplish these goals? Turns out all they have to do is deploy their secret weapon. Farah reveals that, "if Republicans refuse to raise the debt limit, the borrowing must stop - and hundreds of billions of dollars must be cut from the federal budget".
This is the NEXT battle. If you're thinking, "wait a minute, didn't we just have this battle" - you're partially right. The House teabaggers did just try to attach these exact same defunding riders to the budget bill. Now some folks may also be thinking - because there is an apparent tentative agreement and these items aren't a part of it - funding for ObamaCare, NPR/PBS and Planned Parenthood are all safe. Think again.
The odd thing is that Joseph Farah sent me this important letter over a week ago, at which point the possibility of a government shutdown still loomed (and perhaps there will still be one, as the budget agreement still hasn't been officially formalized). So why wasn't the secret weapon a government shutdown? Or why didn't he say there were TWO secret weapons?
We know that if there is a government shutdown Republicans are rightly afraid the public will blame them. Like they blamed the Republicans when Speaker Newt shut down government during Clinton's presidency (twice). Try as they might to deflect blame to the Democrats or the president this time, they KNOW their excuses won't be accepted by the public.
Did we really come close to a government shutdown, or was it simply a negotiating tactic - and the Republicans were always going to flinch? Certainly I believe the House teabaggers were stupid enough to shut the government down. But even if they are stupid enough to vote in favor of the US government defaulting on it debts - I seriously doubt establishment Republicans are that stupid (or I believe most of them aren't).
That is why I think this secret weapon is bullshit. The Republicans are playing a game of chicken with the Democrats (and the economy) and it appears to be working. Round one of Teabag Chicken was when the Republicans held middleclass tax cuts hostage. The hostages of round two were The Affordable Care Act (AKA ObamaCare), Planned Parenthood and NPR/PBS.
Unlike round one where they got their tax cuts for the wealthy, this time they didn't get what they wanted. They did manage to pump up the budget cut figure from 33 to 38.5 billion though. This makes me wonder if that wasn't their tactic all along. Are the establishment Republicans playing the teabaggers for patsies by using their issues (which they KNOW will won't pass the House/be vetoed by the president) to force Democrats to further cut economic stimulus (AKA government spending)?
A 10/29/2008 World Net Daily article titled, "Bush's $2.2 Billion Gift to Planned Parenthood" says, "the Bush administration has extensively funded Planned Parenthood. The total amount of federal funding (through 2006, the most recent figures known) being at least $2.2 billion. In Bush's first year (2001), he approved $202 million for PP; in the last year for which there is reporting (2006), Bush gave PP $337 million – a single year funding increase of 67 percent".
So, the question is: are establishment Republicans playing Teabag Chicken with the administration to get what they want (stimulus cuts that will negatively impact the economy and make it harder for president Obama to get re-elected) - and using/making patsies of their teabag faction? I think so. I also think Congressional Democrats and the administration should stop playing along, as the GOPers are playing them for suckers as well.