Republicans would rather default than raise taxes? Seriously?!
Congressional Republicans don鈥檛 want any more deficit spending鈥搖nless it鈥檚 deficit spending done through the tax code. They think they can play a good game of 鈥渃hicken鈥� when it comes to the statutory debt ceiling by refusing to raise it, as discussed in this (emphasis added):
WASHINGTON 鈥� Some Republican lawmakers said Sunday they opposed raising the ceiling on the nation鈥檚 debt without tackling government spending, and President Barack Obama鈥檚 top economic adviser warned against 鈥減laying chicken鈥� on the issue.
The federal debt is limited to $14.3 trillion, but the debt now stands at nearly $13.9 trillion and is growing daily. Congress last raised the debt ceiling in February 2010 and is expected to consider raising it again as early as March.
To some conservatives, refusing to raise the limit on the federal debt could be an effective tactic to force lawmakers into cutting spending and facing such contentious issues as the rising costs of Social Security, Medicare and other entitlement programs.
Austan Goolsbee, the chairman of the White House Council of Economic Advisers, said that refusing to raise the debt ceiling would essentially push the country into defaulting on its financial obligations for the first time in its history.
鈥淭he impact on the economy would be catastrophic,鈥� Goolsbee told 鈥淭his Week鈥� on ABC. 鈥淭hat would be a worse financial economic crisis than anything we saw in 2008.鈥�
Goolsbee added: 鈥淚 don鈥檛 see why anybody鈥檚 talking about playing chicken with the debt ceiling.鈥�
While saying that defaulting would be 鈥渧ery bad鈥� for the U.S. position in the world, Sen. Lindsey Graham, R-S.C., said he would not vote for raising the limit on the federal debt unless there were a plan in place for dealing with long-term obligations, including Social Security, and for returning to 2008 spending levels.
鈥淭his is an opportunity to make sure the government is changing its spending ways,鈥� Graham said on NBC鈥檚 鈥�Meet the Press.鈥�
But hitting the debt ceiling won鈥檛 stop those 鈥渟pending ways鈥� because policymakers aren鈥檛 really willing to stop those 鈥渟pending ways.鈥� It wouldn鈥檛 reform the Social Security and Medicare programs or automatically repeal any other kind of government spending (wasteful or otherwise). Instead of being a magic brake on deficit-financed government spending, it would be a disastrous brake on financial markets and the entire U.S. and global economy.
The policymakers making these threats about letting the government default don鈥檛 really want the government to default. They just really don鈥檛 want to do anything that would really address the problem. There鈥檚 not enough wasteful spending out there that they are willing to say they will cut. Even the Republicans who would like to see Social Security and Medicare very radically reformed don鈥檛 want to cut those programs鈥� benefits anytime soon.
And those policymakers now threatening to let the government default really don鈥檛 want to accept what the fiscal commissions told them: that the debt problem is not just the fault of too much spending, but also too little taxes. In fact, with their new 鈥渃ut as you go鈥� rule, House Republicans are going out of their way to make sure the debt can keep on rising with more deficit-financed tax cuts, and that tax increases of any sort (including reducing tax expenditures) can鈥檛 be used to offset deficit spending of any kind (whether tax cuts or direct spending). From the :
Cut-as-you-go will be included in the House rules.
- While just a couple of weeks ago Republicans adopted a conference rules to place suspension bills under 鈥渃ut-go鈥� rules, the new House rules expand 鈥渃ut-go鈥� to all bills dealing with mandatory spending.
- The new rule states that if mandatory spending is increased, spending must be cut by an equal or great amount elsewhere.
- Tax increases cannot be used to pay for new mandatory spending.
- This rule will, in practice, replace the Democrats鈥� 鈥減ay-go鈥� rule.
As Bruce Bartlett so eloquently puts it:
It鈥檚 a new rule that says we can only keep enlarging the federal debt via deficit-financed tax cuts. But that鈥檚 obviously not a 鈥渞ule鈥� we need to have imposed upon us. We鈥檝e been doing it unofficially, even under Democratic pay-go rules that did not officially exempt tax cuts, for years.
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