Tuesday, November 23, 2010

Three Weeks After Election Victory, GOP Already Fighting Each Other Over Debt Ceiling

Republican Leadership Faces a Crisis as It Prepares to Take Control of House in January: Congress Must Vote on Raising the Nation's 'Credit-Card Limit' by Spring, But Newly-Elected Tea Party Hard-Liners Vow They Won't Support Raising Debt Limit -- Raising the Threat of a Government Default That Could Set Off Another Financial-Market Meltdown, Plunging the U.S. Economy Into a Free Fall



AFTER ROUTING DEMOCRATS, REPUBLICAN RIFT BLOWS WIDE OPEN -- Less than three weeks after routing the Democrats in the midterm elections, Republicans already are in the throes of a major rift that threatens to destroy party unity. Newly-elected Tea Party-backed Republicans are causing a huge headache for the GOP leadership by vowing not to vote to raise the national debt ceiling -- which Congress must vote on by next spring. Essentially the nation's de facto credit-card limit, the debt ceiling is due to max out by that time. If Congress fails to act, the government would legally default on paying its debts -- forcing the government to shut down and setting off chaos in the financial markets that could plunge the U.S. economy into a free fall. (Photo: Steve Bloom/Barcroft Media)


(Posted 5:30 a.m. EST Tuesday, November 23, 2010)

By SKEETER SANDERS


WASHINGTON -- As the nation prepares to celebrate Thanksgiving, the euphoria and boldness expressed by Republicans in the three weeks since they routed the Democrats to take control of the House of Representatives in January already has given way to bitter internal feuding as the GOP leadership confronts having to make a decision by next spring on raising the nation's de facto credit-card limit.

House Republican Leader John Boehner, who will take over as speaker from Democrat Nancy Pelosi, said Thursday that the GOP-controlled House will have to act on the national debt ceiling, now set at $14.3 trillion. The actual national debt now stands at $13.87 trillion and is expected to hit the ceiling by next spring.

But the speaker-to-be already is facing an open revolt by newly-elected Tea Party-backed hard-liners, many of whom have vowed to vote against raising the national debt ceiling, insisting that voters gave them a clear mandate to reduce government spending and that raising the debt limit would only encourage more spending.

TEA PARTY-BACKED REPUBLICANS WANT SPENDING CUTS FIRST

Representative-elect Tim Scott (R-South Carolina) told The Wall Street Journal on Monday that "The [debt ceiling] vote will garner a lot of attention and provoke a lot of pain and anxiety, but there are consequences to all votes. The question is, when are we going to stop the way we are going? I think we have to stop it now."

And Senator Jim DeMint (R-South Carolina) said on NBC's "Meet the Press" November 7 that he would vote against raising the debt ceiling, "unless it's combined with some path to balancing our budget, returning to 2008 spending levels," and repealing the health-care reform law passed by Congress last spring without a single Republican vote.

"We have got to demonstrate that we have the resolve to cut spending," DeMint said. "We cannot allow that to go through the Congress without showing the American people that we are going to balance the budget, and we're not going to continue to raise the debt in America."

FAILURE TO RAISE DEBT CEILING WOULD TRIGGER ECONOMIC CHAOS

But Boehner, in a series of closed-door meetings with Republican freshmen, bluntly warned the Tea Party-backed firebrands that Congress has little choice but to raise the debt limit. "I’ve made it pretty clear to them . . . that Congress is going to have to deal with this," Boehner said in a Thursday news conference. "We’re going to have to deal with it as adults. Whether we like it or not, the federal government has obligations and we have obligations on our part."

Failure to raise the debt ceiling would force the government to default on paying its bills and shut down. A default would, in turn, trigger severe economic shock waves, damaging, if not destroying, the nation's credit rating.

Interest rates would soar dramatically, making it all but impossible for individuals or businesses to obtain or maintain credit. Foreign investors -- who, according to the Treasury Department, now hold more than $4 trillion in U.S. Treasury securities -- would be prompted not to buy any more, causing the dollar to plummet in value against other currencies and triggering chaos in world financial markets.

That, in turn, would cripple the already-struggling U.S. economy, throwing millions more Americans out of work.

COBURN AIDE: 'ECONOMY IS GOING TO COLLAPSE'

Those dire predictions don't appear to faze Senator Tom Coburn (R-Oklahoma). According to Coburn spokesman John Hart, "We know the American economy is going to collapse, so why don't we start the hard work of cutting spending now? We're already in a crisis, and the time to reduce spending is immediately."

Hart told The Washington Times last Sunday that Coburn was prepared to tie up the debt-ceiling measure unless it's accompanied by major spending cuts. "He's willing to block it, to put a hold on it, to use all procedural tools available, to ensure Congress reduces spending," Hart said.

Other newly-elected Republican firebrands weren't swayed by Boehner's warning, either. Representatives-elect Kristi Noem of South Dakota, >Tim Scott of South Carolina, Reid Ribble of Wisconsin, Steven Stivers of Ohio and Lou Barletta of Pennsylvania all insisted to Boehner that they will vote against raising the debt limit.

Ribble called raising the debt limit "unconscionable" and "insane." Stivers denounced it as "a reckless desire to spend money we don’t have, and borrow money we can’t afford to pay back." Barletta compared the national debt to slavery, denouncing both congress and President Obama of "spending our country into servitude."

FOR TEA PARTY FRESHMEN, A DIFFICULT TRANSITION FROM CAMPAIGNING TO GOVERNING

Boehner faced a difficult task in convening the freshmen on the need to raise the debt ceiling from the start, as many of the freshmen made the national debt and government spending the top-priority issues in their campaigns to unseat Democratic incumbents -- and they're in no mood to do anything to increase the debt further.

At the same time, however, the debt-ceiling vote poses a stark challenge for many of the newly-elected lawmakers to make the transition from campaigning to actually governing.

"A lot of these Tea Party Republicans made a lot of sweeping pronouncements on the campaign trail about cutting government spending and reducing the debt," said a Democratic strategist who spoke on condition of anonymity. "But once they're sworn into office, they're going to get a hard dose of fiscal reality and they'll be forced to do things they swore on the campaign trail they would never do."

WILL OBAMA, DEMOCRATS HANG TOUGH ON BUSH TAX CUTS?

With the Tea Party Republican freshmen likely to insist on deep spending cuts as the price for their support to raise the national debt ceiling, will the Democrats be equally insistent that the Bush tax cuts for the wealthiest one percent of Americans expire as scheduled at the end of the year as the price for their support for spending cuts?

While Republicans have sounded the mantra of tax cuts for more than 30 years, an 18-member bipartisan commission appointed by President Obama to find ways to reduce the more than $1 trillion federal budget deficit made it clear that spending cuts alone cannot close the deficit -- it has grown far too large for that.

In their 50-page preliminary report, released November 10, commission co-chairs Erskine Bowles and Allan Simpson conclude that a combination of spending cuts, tax increases and revisions to existing government programs and departments -- as well as a revision of the tax code -- are necessary to create more sustainable budgets.

Whether Democrats like it or not, spending must be decreased to reduce the deficit. But whether Republicans like it or not, taxes must be increased to close the deficit as well -- and since neither the poor nor the middle class can afford to bear the burden of higher taxes, they must be increased on those who can most afford to bear the burden: The wealthiest one percent of Americans.

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Volume V, Number 46
Copyright 2010, Skeeter Sanders. All rights reserved.






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