House Republicans may be too 'chaotic' to avoid a 'calamitous' debt default: journalist

03 April 2023

U.S. Treasury Secretary Janet Yellen has warned that if the United States defaults on its debt obligations, it could "cause irreparable harm to the U.S. economy," endanger "the livelihoods of all Americans" and create "global financial stability." A default, according to Yellen, would be "devastating" for banks.

Nonetheless, many Republicans in the U.S. House of Representatives are adamant about not raising the United States' debt ceiling. Liberal economist and New York Times columnist Paul Krugman has been slamming them for being willing to risk a major financial crisis in the hope of butchering Social Security and Medicare.

One of Krugman's colleagues at the Times, David Firestone, is not optimistic about House Republicans' ability to work out a reasonable agreement. In an op-ed published on April 3, Firestone expresses fears that House Speaker Kevin McCarthy’s (R-California) caucus may be too "chaotic" to find a solution.

"It's been obvious for months that Republicans in the House of Representatives intend to lead the country toward a calamitous debt ceiling crisis in order to get their way on spending," Firestone laments. "Only in the last few weeks, however, has it become clear just how truly chaotic that process will be. Republicans, it turns out, don’t even know what they want in exchange for dropping their threat to cause a default, beyond a fuzzy shared goal of cutting federal spending. Even if President (Joe) Biden and the Democrats were inclined to negotiate with them to lift the debt ceiling — which would be a serious mistake — it's not clear who their negotiating partners would be."

Firestone adds, "The House has become so factionalized that its leaders cannot speak in one voice, and Speaker Kevin McCarthy may not be able to assemble a majority to lift the debt ceiling at all."

Rep. Patrick McHenry (R-North Carolina), who chairs the House Financial Services Committee, has acknowledged that House Republicans aren't on the same page when it comes to the debt ceiling.

At a late March event hosted by Punchbowl News, McHenry lamented, "I don't see how we get there. And this is a marked change from where I've been. I don't even see a path…. I've never been more pessimistic about where we stand with the debt ceiling, and we've been in some bad situations before."

Republicans presently have a small single-digit majority in the U.S. House. And Firestone is hoping that a debt default will be avoided if Democrats can get enough Republicans to work out some type of agreement with them.

"If Congress doesn't raise (the debt ceiling),” Firestone explains, "the government goes into default and can't make payments on its obligations, including interest on Treasury bonds, Social Security payments and other essential spending — which would quickly crash the U.S. economy…. Democrats say privately that with the debt ceiling deadline probably arriving this summer, they are counting on mounting pressure from financial markets, already jittery from the recent banking crisis, as well as business lobbyists, to persuade enough Republicans to join Democrats in ending the threat at the last minute. Maybe, but with the radical mindset that now pervades the House, it's hard to count on that."

Read David Firestone’s full op-ed for the New York Times at this link.

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