5 Fun Facts About the Fight Over the Debt Ceiling
Continued from previous page
The 1990s stand-off dragged on, causing a lot of real-world pain and two government shut-downs which would bloody the GOP's nose. As Min notes:
The “1995-'96 debt ceiling crisis,” as it is known, caused significant turmoil for our economy, forcing the Department of Treasury to suspend all new debt issuances and causing two temporary shutdowns of all “nonessential” federal government activities, including a cessation of toxic waste cleanups, disease control activities, and a suspension of many law enforcement and drug control operations, among many others. Ultimately, this episode cost the American taxpayer over $800 million, and rattled the confidence of international investors in U.S. government bonds.
Indeed, it was only through the use of some fairly extraordinary measures by President Clinton’s Treasury Department, including a temporary use of retirement funds for former government employees, that the United States managed to avoid defaulting on its national debt during this period. Unfortunately, such measures would not be as effective today, as analysts at Deutsche Bank found. They worry that if it happened today the federal government would “not be able to stave off a government shutdown (or possible suspension of bond payments) for long.”
Debt Ceiling Fight Already Lost?
The Associated Press reported that “Obama acknowledged that he must compromise on spending with Republicans who control the House to avoid” an economic meltdown. "I think [House Speaker John Boehner is] absolutely right that it's not going to happen without some spending cuts," the president told the AP.
That's a missed opportunity. This is an issue that can put a serious wedge between the economic elites who truly pull the GOP's strings and its Tea Party base, and Democrats should pop some popcorn and let them fight it out, while constantly reminding the public that the looming disaster is the result of nothing more than political gamesmanship.
As Matt Yglesias noted, if the debt limit is reached, the White House will have discretion as to what bills get paid and who gets stiffed. “The right strategy,” he writes, “is to start stiffing people Republicans care about.”
When bills to defense contractors come due, don’t pay them. Explain they’ll get 100 percent of what they’re owed when the debt ceiling is raised. Don’t make some farm payments. Stop sending Medicare reimbursements. Make the doctors and hospitals, the farmers and defense contractors, and the currently elderly bear the inconvenient for a few weeks of uncertain payment schedules. And explain to the American people that the circle of people who need to be inconvenienced will necessarily grow week after week until Congress gives in. Remind people that the concessions the right is after mean the permanent abolition of Medicare, followed by higher taxes on the middle to finance additional tax cuts for the rich.
By accepting that negotiation is proper under the circumstances rather than standing firm – by conceding that holding the economy hostage to an unpopular ideological agenda – the Democrats appear to be passing up an opportunity to create their own “leverage moment.”
Joshua Holland is an editor and senior writer at AlterNet. He is the author of The 15 Biggest Lies About the Economy (and Everything else the Right Doesn't Want You to Know About Taxes, Jobs and Corporate America) . Drop him an email or follow him on Twitter .