Politico had an outstanding but truly bone-chilling story yesterday about how appealing the prospects of a default and a government shutdown may be to House Republicans.
According to the piece by Jim VandeHei, Mike Allen and Jake Sherman, forcing a default by not raising the debt ceiling and shutting down the government by not passing a continuing resolution may be the preferred ways to go by a majority of the House GOP caucus no matter what that would mean to the U.S. economy, the Republican Party's overall approval rating, the GOP's prospects for a Senate majority in 2014 or a Republican winning the White House in 2016.
To those of us who have watched Washington operate for a while, this obviously sounds like totally insane, crazy self-destructive behavior by the House GOP.
But it would be wrong to dismiss it out of hand. From the conversations I've had with Republicans House members and staff since the 2012 election, the threats, are real and make a great deal of political sense no matter how obnoxious and damaging it otherwise would be.
Treasury Secretary Tim Geithner was widely quoted today saying that the Republican congressional leadership had "taken default off the table" in its negotiations with the White House on increasing the debt ceiling. Take a look at this story from Reuters that earlier today was published on CNBC.com, for example.
There's a basic problem, however: The GOP congressional leadership doesn't necessarily speak for the rank and file and so can't guarantee that anything it agrees to on the debt ceiling will be approved in their respective houses. Indeed, the lack of control that House Speaker John Boehner (R-OH), House Majority Leader Eric Cantor (R-VA), and Senate Minority Leader Mitch McConnell (R-KY) have over their respective caucuses is one of the big differences between the situation that exists now and the one that took place in 1995-96 when Speaker Newt Gingrich (R-GA) could cut deal with the Clinton White House and be relatively sure that the GOP members would support it. In fact...they did.
Over at The Economist, Greg Ip does a nice job providing some additional details on what I posted earlier this week: Contrary to what some are saying, not raising the federal debt ceiling when it's reached later this year doesn't mean the government automatically will default on its debt. To the contrary, the Treasury has a number of money management techniques available to it to avoid a default even if the debt ceiling isn't raised and...as Greg notes...is very likely to use them.
Meanwhile, over at Reuters, Felix Salmon says that Greg is right and that he hasn't seen the default-isn't-mandatory argument made anywhere else. I congratulate Felix for joining the club and will send him the link to my post shortly.
Much of what being said about what happens if the federal debt ceiling isn’t raised immediately when the current borrowing limits is reached is just wrong. My column in this week’s Roll Call tries to correct the misinformation, misunderstanding, and...well...lies.