It's Time to Really Start Worrying about Default

It's Time to Really Start Worrying about Default

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As we head into a potentially pivotal week in the crucial debt limits talks in Washington, here are what I believe are the four most troubling questions about the impasse – and the even more troubling answers: 

1) Should we be worried that a deal won’t get done? Yes. Mitch McConnell, the Senate Republican leader, is my personal anxiety barometer. He’s in all the private meetings and probably knows the House GOP whip counts as well as Speaker John Boehner and Majority Leader Eric Cantor. McConnell seems worried. First he introduced a gimmicky way to let President Obama raise the debt limit. He knew it would enrage conservatives, but it would save us from Armageddon, which he seems to think is a real possibility. The next day he made his concern even clearer by telling conservative radio talk host Laura Ingraham that default would destroy the Republican brand. Translation: The House R’s actually seem to think default is a good strategy. I’m saying this as plainly as I can: That’s crazy.

2) What is it with some conservative Republicans and expert advice? Examples: Global warming is a bunch of hooey and a liberal trick. Who cares what the overwhelming majority of climate scientists say? If we can find one contrarian scientist out there from the tin-foil-hat club, we’ll believe him. Bailing out the banks – terrible idea. In October 2008, when President George W. Bush, Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke were all begging them to vote yes on the TARP bill to avert catastrophe, House Republicans voted no by a margin of two to one. Now it’s the debt limit. Bernanke again, plus the Chamber of Commerce, the Business Roundtable, bond mega-manager Bill Gross – everyone is warning failing to raise the debt limit would be disastrous. That just seems to make conservative R’s even surer that this is hooey.

3) Why won’t Republicans take the big deal? Obama is offering huge spending cuts, plus tax reform that could lower individual rates and the corporate rate, in exchange for cutting back tax expenditures such as the home mortgage interest deduction. How is that not a fantastic deal and a defining political win? Republicans could credibly claim they had forced Obama to give them the biggest deficit-reduction deal ever, and lowered tax rates in the bargain – and it would be true that this almost certainly never would have happened without their insistence. You can conclude four things: Grover Norquist would score this as a tax increase. Republicans would rather become Democrats than agree to a deal with net tax increases. Republicans would rather have the issue than the accomplishment. What else would they talk about next year? And the killer: The deal would also be a win for Obama.

4) Why did Cantor walk out of the deficit-reduction talks? This is old news by now, but there’s a little history here worth thinking about. This is a rerun of what happened in 1990, when Newt Gingrich, then the hyper-ambitious House minority whip, walked out of the deficit-reduction talks that began with the first President Bush’s decision to abandon his “no new taxes pledge.” All the participants, including Republicans, thought Gingrich was on board, but Newt saw a chance to take a stand on taxes and define himself as the key GOP leader in Congress. Which is exactly what he did. His opposition helped kill the deal (it was later revised and passed) and mortally wound Bush’s chances for reelection. The lesson for R’s: Never, ever compromise on tax increases. Cantor was prepared to play Newt to Boehner as Bush, a play Boehner had already seen once.

Hager is a member of the editorial board of USA Today.

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