Sometime late this week, the United States government will be in a position where it can no longer pay its bills. The trouble is not economic: the U.S. continues to recover, slowly, from the Great Recession. The budget deficit is falling sharply. Nor are the roots of the crisis financial: rarely in history has Washington been able to borrow as cheaply. This crisis is entirely political. And it isn’t all politicians who are to blame. Don’t invoke that favourite phrase: the “dysfunctional Congress.” Do not wish a pox on both their houses. The blame sits squarely on the shoulders of one party: the Republicans.
Led by members in the House of Representatives, lawmakers have threatened to make it impossible for the U.S. to meet its financial obligations. The government behind the world’s reserve currency, the foundation of the global financial system, could default on its debts. The ongoing partial government shutdown is bad enough, reducing growth and consumer spending every day it continues. But its costs are at least manageable and limited. Debt default would be more like a heart attack. It would be a catastrophe on the scale of the meltdown of 2008. Churchill once said that Americans can always be counted on to do the right thing, once all of the alternatives had been exhausted. Unfortunately, as Tuesday turned to Wednesday, the sand in the hourglass was continuing to exhaust itself somewhat faster than the competing proposals for defusing the Republican-built Doomsday machine.
The Republican approach for the past few weeks has been politics by ransom note: Give us what we want, or the economy gets it. The threat of default started as an attempt to force President Barack Obama into gutting or delaying his health-care reform, the Affordable Health Care Act. Then the GOP’s attention shifted to longer-term spending and deficit reduction – all perfectly reasonable objectives for a conservative party. What is unreasonable, incomprehensible and dangerous is the eagerness with which Republicans have been willing to threaten economic calamity unless they get their way.
Most recent polls say the reckless approach has deeply damaged the Republican Party’s standing with voters. Democrats, until recently worried about losing control of the Senate in next fall’s mid-term elections, are now seriously talking about regaining the House. The threat of electoral defeat may be the only thing that can get the GOP to pull back on its threat of government default.