Too many people seem to think that a government shutdown does not affect most people, is a nuisance for some people, and hurts only the government workers (whom we are all supposed to hate anyway, so who cares). These same people think that the Gingrich-Clinton shutdown proved that shutdowns are not very harmful. But what these ignoramuses do not get is that the Gingrich-Clinton shutdown took place against the background of a booming economy. Today we have a weak economy, with falling government spending the main cause of that weakness. A shutdown would cause a further economic hit which will become a big deal if the shutdown goes on and on.
But this government shutdown will seem benign compared with what will happen if Republicans refuse to raise the debt ceiling. Failure to raise the ceiling would mean missed payments on existing U.S. government debt with terrifying consequences. Financial markets from around the world have long treated U.S. bonds as the ultimate safe asset. The assumption that America will always honor its debts is the bedrock on which the world financial system rests. Treasury bills (short-term U.S. bonds) are what worldwide investors demand when they want absolutely solid collateral against loans. Treasury bills are so essential for this role that in times of severe stress they are treated as being better than cash.
A default could make the world believe that U.S. bonds were not safe, that America could no longer be counted on to honor its debts. Suddenly, the whole world wide financial system would be disrupted. Financial institutions would quickly cobble together alternative arrangements while dumping U.S. bonds creating a huge financial crisis. The value of the dollar would drop exponentially causing prices to soar. For example, a loaf of bread that now costs $3.50 would cost two to three times as much. This crisis would dwarf the crash set off by the failure of Lehman Brothers in 2008.
Our U.S. government – as we once knew it – would never run this kind of risk; except that we now have a contingency of insane Teapublican libertarian ignoramuses in our Congress that thinks defaulting on U.S. bonds would be just a hiccup in the world market. These clowns are delusional, about both the economics and the politics.
Because of the Teapublicans we currently do not have a sane political system; we have a system in which a substantial number of Republicans believe that they can force President Obama to cancel the health care reform by threatening a government shutdown, by threatening a debt default, or both, and in which Republican leaders who actually know better are too cowardly to tell the truth to party’s delusional wing – or maybe they have tried and failed because these numbskulls have no understanding due to low IQs.
These Teapublican Christian fundamentalist radicals generally reject expert warnings about the dangers of default, so they apparently have every intention of marching this country's economy over the cliff if President Obama does not give them everything they want – President Obama's re-election means nothing to them. They believe that the majority of the United Stated citizens are on their side. Meanwhile, reasonable people know that President Obama cannot and will not let the office of the President of the United States be blackmailed in this way – and not just because health reform is his key policy legacy. The biggest reason is that if he makes concessions to people who threaten to blow up the world economy unless they get what they want, he might as well tear up the Constitution. But Teapublican radicals still insist that President Obama must cave in to their demands.
Even though they say they do, these Teapublicans do not respect the Office of the Presidency or the Constitution. They do not have any understanding about how our government was set up to work.
The votes to fund the government and raise the debt ceiling are there, and always have been. Every Democrat in the House – along with enough Republicans to gain a majority – would vote for a clean continuing resolution to keep the government running. The problem is that Speaker Boehner is so fearful of the Teapublicans taking his position of Speaker from him that he will not bring the CR to the floor for an up or down vote.
I have read many OpEds and listened to pundits on television who think that Wall Street will come to the rescue by telling Republican leaders that they have to put an end to the nonsense. But Teapublicans only listen to FOX news. They will not listen to the business community. Big Business currently lacks the power to rein in the Tea Party radicals that they helped to put into office. President Obama may ultimately have to either let default happen or give the blackmailers some sort of win. In other word, he will have to choose a financial crisis or a constitutional crisis.
I say he should choose default and let the far right wing learn their lesson even though this country will pay for it for years. It would be better than shredding our Constitution.
Boehner, definitely, is to blame for being such a weak “leader.” But the ultimate blame for the shutdown and for the possible default lies in the ignorant, uneducated, uninformed sheeple who follow FOX News' every command, believes every FOX News' lie, and voted these damned Teapublicans into office.