I’ve avoided talking about the debt ceiling debates for as long as the people on the Hill have avoided doing anything about the debt ceiling itself. Also, it’s hard to make financial ratings, credit defaults, and inadequate remedies sound like popular culture—unless, I guess, we’re talking about how the mortgage crisis took over the news media for a solid two months in 2008. But hey, there are now signs of progress and more interestingly, those signs point to an impending doomsday for the Republicans, and not just in the 2012 election. So good for you debt ceiling! You made the cut for this series.
When someone says, “This will put the US into a death spiral,” even the most anti-government of the GOP listen. And when the person saying “Death Spiral” is from a major credit rating agency, and is using it to say that missing the debt ceiling deadline will be worse than the nightmare that faced Lehman Brothers, well, I’m surprised they didn’t have to haul out fainting GOP members of Congress and apply witch hazel or something to their faces to revive them.
So what happened yesterday, and why am I pointing so excitedly to it? House Republicans held a closed-door meeting with officials from Wall Street credit agencies. Afterward, there was a lot of dampening down of the meeting’s tone. It was called “objective,” “dispassionate,” and “not nearly as apocalyptic as the phrase ‘death spiral’ made it sound,” according to the Politico reporting. While I’m still working on my fly-on-the-wall impersonation, I can only speculate that the meeting was probably rather straightforward. And yet it still signals some kind of ending for the GOP’s experiments in right-wing zealotry.
I think it means the pendulum is about to swing back. Not quickly, not with any apology for the last 25 years of conservative creep to the right, but we will have to start to see a regression toward the center from the GOP.
Why? They’ve simply run out of room to move rightward. When their most expressive faction is willing to send the entire country into default on the misguided principle that they’re for “smaller government,” then the experiment is nearing an end. Those powerful, big-money Koch Brothers who managed to gut unions in Wisconsin through their governor intermediary? They don’t want to see the US in default.
Maybe the GOP’s biggest donors wouldn’t even mind a default if it were passed to another generation to fix (which this certainly would be), but some of the biggest calamities will happen immediately, like the US Treasury bond market collapsing. That alone would cost US taxpayers another $75 billion a year, but it would also devastate foreign corporate sponsorship and investment.
Next, ths US sovereign credit rating will be downgraded. This makes it more costly for the government to take loans from foreign nations, and destabilizes most, if not all, of our domestic banking and credit markets. Now those Republican backers are hurt where it counts, in interest rates. Add to this a probable run on money market accounts–which is exactly what happened to Lehman Brothers, and possibly why they were brought up in the House Republicans’ closed meeting. If we all thought the bailout in 2008 was an extreme measure, that now looks like a little loan from grandma in comparison. This isn’t what mainstream GOP party members want, but they’ve had to pretend for the last several weeks that they’re considering letting us touch the debt ceiling. All manner of gutting the government budget has been discussed, but a lot of this now looks like they’re letting the posturing happen so they can walk away saying they gave equal time to all serious ideas.
Thinking back to 1994, with Newt Gingrich as the newly elected Speaker of the House, and the GOP “Contract with America,” we can see some of the roots for this party’s crisis. It codified sentiment against “bigger” government, it threw social issues like welfare (using the guise of “personal responsibility”) into calculations for federal financial spending, it asked individuals to consider whether the monolith of “the government” was helping them find the American Dream or not, and was suspicious of the government’s ability to put the interests of its people ahead of its self interest. Certainly some of these ideas—like the greedy welfare queen—were Ronald Reagan’s inventions, but Mr. Gingrich put them into contract form and insisted his fellow Republicans sign it as they took over control of the House. It was a kind of mentality training, and it sharpened the rhetoric used by the GOP in the so-called culture war with liberals.
We are at the point now where that culture war is facing pushback from not just those liberals, but from working and middle class union members, reproductive rights activists, students, civil rights activists, health care providers, and educators. Recall elections in Wisconsin have all been won so far for the progressive side of the ticket, and just this week in Ohio, voters gathered three times the number of signatures needed to put a repeal of their governor’s union busting law on the November ballot, before the law ever gets to take effect in that state.
If much of the pressure to “cut, cap, and balance” is coming from first-term Republicans in the House as they seek to please the Tea Party segment of their party, it may speak to a developing schism within the GOP; extreme conservatives will likely be more than disappointed with the eventual outcome negotiated by President Obama. But mainstream Republicans and incumbents know that the government needs its credit rating to operate. In other words, old-school Republicans will have to admit on some level that they aren’t really anti-government, or even anti-big-government. And in the meantime, Tea Party candidates may be making a very bad name for themselves.
What the debt ceiling crisis asks us to think about are our interpretations of the 2008 bailout, where the borderland is between individual, collective, and governmental responsibility for our country’s success, the structure of our voting system, and the longevity of any group who seeks to undo federal systems as part of the federal system.
Way to go, debt ceiling! Thanks for making us think. Please go away now. Perhaps we are nearing a moment when we can talk about what government can do well for its citizens and residents.