Sen. Harry Reid is crying great crocodile tears for House Speaker John “TARP” Boehner. He says that Boehner is dealing with Anarchists: Tea Party members.
“As I said on the floor today, the anarchists are winning. Anything that can be done to slow down, hurt or get rid of government any way, that’s good. Shutting down the government obviously is what a majority of the Republican caucus wants to in the House.
“If the Republican leaders keep giving in to the Tea Party and their impossible demands, they must be rooting for a shutdown.”
This would certainly be good news, if true. The House Republicans are in a position to do just this. They have the votes to shut down large chunks of the federal government. If they were to vote against raising the debt ceiling, the Obama administration would have to find ways to run the federal government without a deficit.
Boehner is trying to get a compromise: a debt ceiling increase of $988 billion. That is his idea of a compromise. But he might settle for more.
Meanwhile, the Department of the Treasury has been running the government since May 17 without increasing the official debt, despite the continuing deficit. The Treasury has adopted “extraordinary measures” to freeze the debt just below the ceiling. The Treasury is panicked over the threat of the Republicans’ refusal to raise this ceiling. We read this on its website:
The debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.
Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations – an unprecedented event in American history. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans – putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession.
This is straight Keynesiamism. It promotes permanent deficit spending as a way to keep the nation out of recession. The Federal Reserve must keep buying $540 billion a year in Treasury bonds, this implies — no taper. A balanced budget? Catastrophic, the Treasury says.
The House Republicans have the votes to do this. The “anarchists,” as Reid calls anyone who wants a balanced budget, need only persuade the Republicans to vote not to raise the debt ceiling. But will they? I see little evidence of this. They would have to take the heat from Social Security and Medicare wards of the state.
They tried this for a month under Gingrich in 1995/96. Clinton sat tight. The House soon capitulated. Obama can play the same game.
But it would be fun to watch. Which bureaucracies would be placed on the chopping block? The wailing would be a sound for sore ears.