It has been seven days since the United States government shut down. How much of a nightmare has it been? To the average American, not much. To the 800,000 government workers out of jobs, it’s been a hassle. To the rest of the world, it’s yet another sign that the United States’ resolve as a superpower is faltering. How can we lead the rest of the world if we can’t even keep ourselves running?
To the average American, none of this matters much. What will matter, though, is what’s coming in nine days. On Oct. 17, our government will run out of money to repay its debts. Now, it’s important to know that raising the debt ceiling does not mean that our deficit increases, nor does it authorize new spending. It simply means that the government is allowed to pay back money it already owes to debtors.
We saw the prospect of a debt default raised before, in the summer of 2011. The government avoided a default, but just narrowly. So narrowly, in fact, that our credit rating was downgraded for the first time in history.
This time around, it’s far from certain that we will be able to raise the debt ceiling at all. Democrats and Republicans seem no closer to resolving the issue that caused the government to shut down in the first place — despite the dire consequences of debt default, the same faction of Republicans who caused the shutdown seems committed to causing a default unless their demand is met: the defunding or repeal of ObamaCare.
It’s impossible to know what a government default would look like, but here are three forecasts from a group of bipartisan business leaders and economists:
1. Severe economic contraction, a return to recession and possibly a full depression. Not only would this mean massive job loss on Main Street, but also lower tax revenues and, ironically, even higher debt.
2. The disruption of Social Security payments. As the biggest holder of U.S. debt, the Social Security fund would be imperiled, having direct impact on the average American.
3. The U.S. dollar would lose pretty much all value. The second-largest holder of debt is the U.S. Federal Reserve. Pretty much we’d see instant inflation and a huge impact on worldwide markets.
This is just the beginning of the fallout caused by a default. The question is, how the hell is a default now a serious possibility?
In politics, there’s rarely a case as clear-cut or as unidimensional as this. The roots of both the government shutdown and the prospect of a default lie within the Affordable Care Act. There may be problems with the law, and it may be unpopular, but time and again opinion has shown that Americans would much rather have ObamaCare and a functioning government than no ObamaCare and no government.
Yet Tea Party members like Sen. Ted Cruz and Speaker of the House John Boehner are afraid of the political consequences of openly disagreeing with the Tea Party and have said that until there are “negotiations” over ObamaCare, there will be neither a vote to reopen the government nor a vote to raise the debt ceiling.
It’s not clear what Boehner means when he talks about “negotiations,” because there doesn’t seem to be much room for compromise when his one demand is the end of ObamaCare.
So it appears that we’re barreling toward a default. That is, unless Boehner brings a provision-free budget bill to the floor to reopen the government — with 21 Republicans promising to vote to reopen the government without a repeal of ObamaCare, it would very likely pass. But Boehner refuses to let a vote happen, because if he does so he will likely lose his speakership.
Here we have yet more proof of how dire our political situation has grown. When we can’t do something as simple as keep the government open, we’re in trouble. The only good news is that elections are next year. Maybe this time, we’ll put into office some people who can set aside ideology and actually get things done.