The recent meltdown of the Republicans in the U.S. House of Representatives is worrisome, because the same extreme faction that blocked Congress from choosing a speaker and getting its work done is now threatening a showdown on the upcoming vote to raise the debt ceiling. But forcing a debt ceiling crisis is like going on a crash diet: It can be harmful, and it doesn’t really help us in the long term.
First, it is important to understand that refusing to raise the debt ceiling would not lower our debt. The vote simply allows the government to borrow more money to finance spending Congress and the president already have committed to spend.
The time for showing restraint was earlier. And even though the Republicans would like to create the impression that the Democrats are solely responsible for the nation’s debt, they have also been fiscally irresponsible for years.
We really do have a serious problem with both yearly deficits and the country’s cumulative debt. It does need to be addressed, and hard decisions need to be made. But if we were to default on our debt, the consequences would be devastating.
Our budget doesn’t need a crash diet; it needs a comprehensive life change, and both parties need to do this together. Both parties need to learn how to exercise fiscal restraint.
We have come to the brink before, with Democrats and Republicans making noise at one another, but we have never gotten to the point of actually defaulting on our debt.
The problem is that times have changed. There is such animosity now between the two parties that compromise might become impossible, and some of the Republicans in the House seem to believe that brinkmanship is a virtue.
A default could cause a number of serious problems for our economy and our economic reputation worldwide. This is really serious.
We reached our debt ceiling of $31.4 trillion in mid-January. Treasury Secretary Janet Yellen has said that she can take some extraordinary measures for a short time — perhaps until June — to keep making some basic payments on Social Security and Medicare and avoid default. But that will not last for long. Without a vote to raise the debt ceiling, economic horrors will follow.
A report from the nonpartisan Committee for a Responsible Federal Budget points out that “a default, or even the perceived threat of one, could have serious negative economic implications.”
The 2011 debt ceiling standoff “raised borrowing costs by a total of $1.3 billion in the fiscal year 2011, and S&P downgraded the U.S. credit rating for the first time in history. And the 2013 debt limit impasse led to additional costs over a one-year period of between $38 million and more that $70 million.”
Fitch Ratings recently warned that even a protracted fight over the debt ceiling this year could force it to downgrade the U.S. credit rating.
If we were to actually default, the committee report says that we could experience domestic economic effects similar to that of the Great Recession, with a significant decline in gross domestic product, the loss of millions of jobs, with unemployment rising to as much as 9%.
In addition, the stock market would suffer a terrible blow, since investments would not be seen as safe. It would increase interest rates and contribute to inflation.
Social Security payments and Medicare coverage would ultimately be affected, plunging the country into the kind of crisis it has not experienced since the Great Depression.
And the effects on global financial markets would be devastating, since international markets “depend on the relative economic and political stability of U.S. debt instruments and the U.S. economy.” If we did default, would the world ever be able to trust the U.S. economy again?
A default would not just cause short-term economic problems. The effects would last for years and could leave a permanent stain on the U.S. reputation for stability. Jacob Bogage of The Washington Post reports that Secretary Yellen has said a default could cause “irreparable harm to the U.S. economy.”
Our national debt is real, and it must be addressed, but holding the debt ceiling hostage is no way to achieve real, sustained results.
Trying to prove that the other political party is evil is likewise no solution. Shouting insults and threats does not provide answers. We need our representatives in Congress to actually work together to make changes that will help us. This means they need to communicate with one another like adults and be willing to compromise. Right now we need governing, not grandstanding.
Solomon D. Stevens was a professor of constitutional law, American government and political theory before retiring to North Charleston. He is a regular contributor to The Post and Courier Opinion section.
