Those involved in the bipartisan debt-reduction talks hope to have some kind of deal in place before the 4th of July. The point is to prevent the debate from getting too close to the early-August crisis point, because even nearing that deadline would likely do serious damage to the global economy and U.S. credit worthiness.
And what if Republican hostage takers aren’t quite satisfied with their ransom by July 4? Senate Minority Leader Mitch McConnell (R-Ky.) suggested yesterday he could support a short-term extension.
“The president and the vice president, everybody knows you have to tackle entitlement reform,” McConnell said on CBS’ “Face the Nation.” “If we can’t do that, then we’ll probably end up with a very short-term proposal over, you know, a few months, and we’ll be back having the same discussion again in the fall.”
Leaders of both parties have said throughout the debt-limit debate that they would prefer a measure to raise the $14.3 trillion borrowing limit through at least the end of 2012 so as to spare members the politically unpopular move of voting to raise the country’s borrowing limit multiple times.
Still, the remarks by the Senate’s top Republican Sunday are a reflection of the potential consequences if congressional leaders and the White House fail to strike a sweeping debt-limit deal.
Obviously, if the choice comes down to a temporary reprieve or Republicans causing a recession on purpose, the former is the more attractive option.
Having said that, McConnell’s approach still seems deeply irresponsible. We’ll have one potential debt crisis created by congressional Republicans, followed by another potential debt crisis created by congressional Republicans.
There was a period of time — I believe it’s called “January 2009 through December 2010” — that the GOP swore up and down that “economic uncertainty” was the single most dangerous threat in the world. To thrive, policymakers must stamp out uncertainty wherever it exists, which will in turn generate confidence and expand investments.
And yet, here we are.
McConnell is basically positioning himself as an uncertainty-creating machine, telling the world, “Maybe the U.S. is willing to pay its debts; maybe not.” And then, choosing to say it again a few months later.
Indeed, playing incremental games with the ability of the country to pay its bills sends a loud signal to foreign countries and markets around the globe: there are just enough children in positions of authority in Congress to cause genuine concern about the nation’s finances.
The only thing more irresponsible than Republicans holding the economy hostage is Republicans holding the economy hostage twice.