Opinion: Avoid self-inflicted wound in DC
House Republicans are playing a dangerous, potentially ruinous game in Washington.
We’re not just talking about the government shutdown, expensive and unnecessary as it is.
In today’s dollars, it cost over $2 billion last time the government shut down in 1995-1996.
Nothing was accomplished then, and nothing will be accomplished this time, either, except further demoralization of an already beaten down federal workforce.
The battered economy will be further hurt by the shutdown, which forced 800,000 federal employees out of work indefinitely and closed federal offices, parks, game refuges and other services not deemed vital.
What a waste.
The much bigger threat is the federal debt limit that must be raised by Oct. 17 or risk having the federal government default on its bills.
Politicians from both major parties are already saying if the shutdown lasts into next week, it will get wrapped up in negotiations over raising the debt limit.
Last time politicians played chicken with the national debt limit, in 2011, the stock market fell by 2,000 points and one of the big three credit agencies downgraded the nation’s credit rating.
The 10-year cost of that fiasco is pegged at $19 billion.
In general, the lower the credit rating, the more it costs to borrow money.
That’s bad. As a nation, we borrow a lot of money, and we pay very little for the privilege.
The United States has enjoyed very low interest rates on its bonds, and that means more money to spend on roads and ships, Head Start and NASA.
Conservative House Republicans risk ruining a good thing by playing chicken with the debt limit, and they risk crashing an economy that’s finally starting to pick up speed.
The thing about financial markets is they’re very jumpy, and fear-based. Perception is everything. If investors start to have doubts about whether the Treasury will make its bond payments, we as a nation are in deep trouble.
Federal Reserve Chairman Ben Bernanke has said a U.S. default could be a “recovery-ending event” that would likely spark another financial crisis.
Remember the last financial crisis? Mass layoffs, a tanking stock market, deep recession, record foreclosures? No political party should play games in this area.
Even toying with the approaching debt limit could “inflict significant harm on the economy,” according to analysis by the Council on Foreign Relations.
Just by creating uncertainty, Republicans will place upward pressure on interest rates. Rate increases would not only hike future borrowing costs of the federal government, but would also raise capital costs for struggling U.S. businesses and cash-strapped homebuyers.
The House Republicans are fighting to defund Obamacare, but they don’t control the Senate or White House, and will have to wait until they do. If the Affordable Care Act is as bad as they say, the program will fail, Democrats will be swept out of office, and then Republicans can overturn the law.
Until then, they need to take their legislative responsibilities very seriously and at a minimum, do no harm.