Republican rebellion drives the U.S. government closer to debt disaster

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A growing insurgency within the ranks of the Republican Party lies behind Tuesday's expected shutdown of the U.S. government and the terrifying risk that America could default on its debt.

Unless that insurgency can be brought under control, the damage to investor and consumer confidence will, at the least, slow the feeble recovery and, at the worst, plunge the United States back into recession, and Canada along with it.

"Failure to [raise the debt ceiling] would be far more dangerous than a government shutdown," President Barack Obama warned late last week. "It would effectively be an economic shutdown with impacts not just here, but around the world."

This is the peak of a very long climb.

Economic and social conservatives despaired over George W. Bush's presidency, which ran massive deficits and expanded entitlements in health care and education.

They found a champion in Sarah Palin, the former Alaska governor who was Senator John McCain's running mate in 2008. Their dissatisfaction acquired a name in early 2009 – the Tea Party. The Tea Partiers scored noticeable successes in the 2010 mid-term elections that saw the House fall into Republican hands.

But they failed to find a candidate who could displace the party establishment's choice for presidential candidate in 2012, former Massachusetts governor Mitt Romney.

Now, with Mr. Obama well into his second term, with the Republican establishment hopelessly compromised in the eyes of the Tea Partiers, and with the most important provisions of the Patient Protection and Affordable Care Act, better known as Obamacare, set to go into effect Tuesday, powerful conservative organizations such as the Heritage Foundation, FreedomWorks, the Senate Conservative Fund, Club for Growth and others are supporting Republican representatives and senators willing to shut down the government rather than fund Obamacare.

Those Tea Party Republicans, in turn, have made it impossible for House Speaker John Boehner to forge a compromise with Democrats.

In the Democrat-dominated Senate, freshman Senator Ted Cruz of Texas has led a minority of senators to defy the Republican leadership in the fight to kill Obamacare.

Not only that, Tea Party politicians and donors are openly attacking mainstream Republican colleagues and planning to challenge their renomination.

"I think it's completely destructive," John Cornyn, the Republican Senate minority whip, told Politico.com. "They are spending most of their money going after Republicans and making it harder for us to nominate and elect Republicans and regain the majority."

But the militants are resolved. "Conservatives understand that rather than form a third party, their only hope is to seize control of the corrupt, rotting hulk of the GOP, which they now can do with the help of a reinvigorated Tea Party," wrote columnist Michael Walsh at National Review Online.

Americans can do without a few weeks of their federal government, provided essential services are maintained. Republican and Democratic tussles led to a similar shutdown in 1996, though the Republicans paid a political price in that year's elections.

But by Oct. 17, the United States government will hit the debt ceiling. Without congressional authorization to raise that ceiling, it will be unable to pay all of its bills.

The danger is that the Republican leadership, held hostage by the Tea Party, will refuse to raise the debt limit unless Obamacare is defunded. The Democrats in the Senate will refuse, resulting in impasse and default.

"Any delay in raising the debt ceiling would have dire economic consequences," Mark Zandi of Moody's Analytics testified on Capitol Hill last week. "Consumer, business and investor confidence would be hit hard, putting stock, bond and other financial markets into turmoil."

In which case, whether the Democrats, the Republicans or the Tea Partiers get blamed for the mess would be the least of most people's concerns.

John Ibbitson is the chief political writer in the Ottawa bureau.