Wall Street to GOP: Are you nuts?

As Republican dysfunction reaches new lows, the GOP strategy of holding hostage both government funding and the full faith and credit of the United States have been criticized by economists, the American people, and now one of their greatest allies, Wall Street. From Politico:

“Senior Republicans believe they will be on stronger political ground if they allow a relatively clean bill funding the government to reach the president’s desk and instead use the debt-hike battle to gut Obamacare. That’s a very dubious assumption.”

“Political analysts and market experts say this strategy could wind up doing lasting damage to both the United States economy and the GOP’s national political standing.”

“The fundamental flaw: There is no scenario under which the GOP is going to achieve its main stated goal, delaying the Affordable Care Act, through a debt limit showdown. The White House and Senate Democrats would never agree to such a demand. And senior administration officials say privately that their public refusal to negotiate over the debt limit is not simply a political ploy they will inevitably have to cast aside. Perhaps aware of the risks, House GOP leadership is now considering postponing a vote on a debt limit that includes an Obamacare delay to see what they can get out of a continuing resolution that funds the government past Sept. 30.”

“A brief shutdown would have some negative economic effects and could create political blowback on the GOP. But it would cause far less long-term damage than a default, which would likely send interest rates sky-rocketing, crush the stock market, devastate business and consumer confidence, and probably send the nation’s economy hurtling back into recession if not depression.”

“’The economic damage created by a government shutdown doesn’t compare to that of breaching the debt limit,’ said Mark Zandi of Moody’s Analytics. ‘Breaching the limit would be an economic disaster. Perhaps Republicans feel that gives the threat of breaching the limit more leverage. Or perhaps some don’t believe the impact of breaching the limit would be that bad. But to be frank, I’m as perplexed as you are.’”

“So, over the next two weeks, GOP leadership will have to decide whether pushing for concessions from the White House they have virtually no chance of getting and that enjoy only limited support within their own party is worth the risk of getting blamed for a historic and potentially devastating default.”