WASHINGTON — Senator Richard Burr, Republican of North Carolina, a
reliable friend of business on Capitol Hill and no one’s idea of a bomb
thrower, isn’t buying the apocalyptic warnings that a default on United
States government debt would lead to a global economic cataclysm.
“We always have enough money to pay our debt service,” said Mr. Burr,
who pointed to a stream of tax revenue flowing into the Treasury as he
shrugged off fears of a cascading financial crisis. “You’ve had the
federal government out of work for close to two weeks; that’s about $24
billion a month. Every month, you have enough saved in salaries alone
that you’re covering three-fifths, four-fifths of the total debt
service, about $35 billion a month. That’s manageable for some time.”
As President Obama steps up his declarations about the dire consequences of not raising the debt limit,
increasing numbers of Congressional Republicans are disputing that
forecast, as well as the timing of when the Treasury might run out of
money and the implications of a default, further complicating the
negotiating situation for both Mr. Obama and Speaker John A. Boehner, who must find a way out of the impasse.
Both men were counting on the prospect of a global economic meltdown to
help pull restive Republicans into line. On Wall Street, among business
leaders and in a vast majority of university economics departments, the
threat of significant instability resulting from a debt default is not
in question. But a lot of Republicans simply do not believe it.
A surprisingly broad section of the Republican Party
is convinced that a threat once taken as economic fact may not exist —
or at least may not be so serious. Some question the Treasury’s
drop-dead deadline of Oct. 17. Some government services might have to be
curtailed, they concede. “But I think the real date, candidly, the date
that’s highly problematic for our nation, is Nov. 1,” said Senator Bob
Corker, Republican of Tennessee.
Others say there is no deadline at all — that daily tax receipts would be more than enough to pay off Treasury bonds as they come due.
“It really is irresponsible of the president to try to scare the markets,” said Senator Rand Paul,
Republican of Kentucky. “If you don’t raise your debt ceiling, all
you’re saying is, ‘We’re going to be balancing our budget.’ So if you
put it in those terms, all these scary terms of, ‘Oh my goodness, the
world’s going to end’ — if we balance the budget, the world’s going to
end? Why don’t we spend what comes in?”
“If you propose it that way,” he said of not raising the debt limit,
“the American public will say that sounds like a pretty reasonable
idea.”
In a news conference, Mr. Obama said repeatedly that those who doubted
the repercussions of a default were making a huge mistake.
“When I hear people trying to downplay the consequences of that, I think
that’s really irresponsible, and I’m happy to talk to any of them
individually and walk them through exactly why it’s irresponsible,” he
said. “And it’s particularly funny coming from Republicans who claim to
be champions of business. There’s no business person out here who thinks
this wouldn’t be a big deal, not one. You go to anywhere from Wall
Street to Main Street, and you ask a C.E.O. of a company or ask a
small-business person whether it’d be a big deal if the United States
government isn’t paying its bills on time. They’ll tell you it’s a big
deal. It would hurt.”
The turmoil created by the partial shutdown of the federal government
has already sent investors fleeing from stocks to the safe harbor of
Treasury bonds, long considered the safest investment on earth because
the full faith and credit of the United States government has never been
questioned. If that safe harbor is undermined, most economists have
said loudly and repeatedly, the impact could be catastrophic.
The U.S. Chamber of Commerce and the National Association of
Manufacturers, both bastions of Republican support, sent letters to
Congress on Tuesday urging action on the debt ceiling.
“Our nation has never defaulted in the past, and failing to raise the
debt limit in a timely fashion will seriously disrupt our fragile
economy and have a ripple effect throughout the world,” wrote Jay
Timmons, the president of the manufacturers’ group.
Some Republicans trust such warnings.
“Unlike some of my colleagues, I’ve been told by too many people in the
financial business that there will be reactions in the market,” said
Senator John McCain, Republican of Arizona. “Of course I’m worried.”
But the voices of denial are loud and persistent, with some Republicans
saying that the fallout from the continuing shutdown and the automatic,
across-the-board budget cuts known as sequestration has been less severe
than predicted.
Mr. Paul acknowledged that some economists disagreed with him, but said
others agreed. Peter Morici, a conservative economist and a frequent
guest on Fox Business, dashed off a column on Tuesday in which he argued
that “House Republicans, by refusing to raise the debt ceiling until
they obtain budget reforms, may be the country’s last hope to avoid a
financial ruin.”
Congressional Republicans have varied arguments. To Representative Paul
Broun, Republican of Georgia and a candidate for the Senate, it is a
question of ranking the evils.
“There are a lot of things that are going to affect our economy,” he
said. “The greatest threat right now is Obamacare. It’s already
destroyed jobs, it’s already destroyed our economy, and if it stays in
place as it is now, it’s going to destroy America.”
Representative Ted Yoho, a freshman Florida Republican who had no
experience in elective office before this year, said the largest economy
on earth should learn from his large-animal veterinary practice.
“Everybody talks about how destabilizing doing this will be on the
markets,” he said. “And you’ll see that initially, but heck, I’ve seen
that in my business. When you go through that, and you address the
problem and you address your creditors and say, ‘Listen, we’re going to
pay you. We’re just not going to pay you today, but we’re going to pay
you with interest, and we will pay everybody that’s due money’ — if you
did that, the world would say America is finally addressing their
problem.”
Representative Justin Amash, Republican of Michigan and a leader of the
House’s libertarian wing, said: “There’s no way to default on Oct. 17.
We will have enough money to make interest payments. The issue is, how
do we restructure our government so we don’t have to keep hitting the
debt ceiling?”
And while Representative Trent Franks, Republican of Arizona, conceded
that a government that could no longer borrow money would have to
curtail some of its contracting, he said Democrats should not get
carried away.
“It’s like everything else here,” he said. “People on both sides of
every argument seem to employ hyperbole when they could just state the
truth and it would still be of significant consequence.”
SOURCE : http://www.nytimes.com/2013/10/09/us/politics/many-in-gop-offer-theory-default-wouldnt-be-that-bad.html
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