“I cannot believe that Republicans would let the country default. It has always been bipartisan to deal with the debt ceiling,” Senate Majority Leader Chuck Schumer said Wednesday. “When Trump was president I believe the Democrats joined with him to raise it three times.”
House Speaker Nancy Pelosi was blunt in a call with House Democrats: “For Republicans to say they will never do it is typically irresponsible.” Pelosi also framed the issue smartly: “Understand this, my colleagues—this is Trump’s money [spent]. […] This is paying for his tax scam, this is paying for COVID, a responsibility we all share.”
That’s absolutely true: This is about obligations already incurred by the government—not any new spending. However, Republicans might try to frame it as part of the “big spending” infrastructure and COVID-19 relief plans. Trump’s disastrous response to the pandemic on top of the GOP’s tax cuts for billionaires have cost the nation billions of dollars, and all of us non-billionaires are paying for it.
President Joe Biden was dismissive of the threat. Asked if he was worried about it, he said simply “no. […] They’re not going to let us default.”
That’s probably true, because default would be really bad not just for the U.S. economy, but the global economy. As the world’s largest debtor, the idea that those loans might not be paid is sort of destabilizing internationally. That’s one of the reasons that the last time the Republicans were playing tricks like this, the S&P downgraded the country’s credit rating for the first time ever.
For a start, going into default would throw into question the government’s ability to make payments such as Social Security, Medicare, military salaries, and veterans benefits. It would gut demand for U.S. Treasury bonds, because they would no longer be seen as safe investments and interest rates on those bonds would go way up, which would probably also make interest rates for consumer loans—credit cards, car loans, mortgages—go up. Which could slow the recovering economy already being threatened by COVID-19’s resurgence.
This is going to take some steel nerves on the part of all the Democrats, and going to the brink of the cliff and being willing to kick Republicans off of it if they let it blow up. It’s going to take Biden resisting his usual urges to intervene personally (we’ve been there before, and it did not end well).
Recognizing who the Republicans are—and taking them at their word that they’re bomb-throwing nihilists, as this letter from 46 of them shouts—is essential. Now would also be a really good time to get rid of the filibuster.