Republicans continue to float the idea of holding the debt limit hostage so that they can get their way on fiscal negotiations. Defaulting, as the President has warned, would hurt our economy, delay Social Security, Medicare and military payments, and could lead to a credit downgrade (again).
But don’t worry: Republicans think they have a plan. A number of them have come out in support of the “Pay China First” plan that they say would prioritize payments in the case of a default, ranking expenditures by importance. Unfortunately, as the Washington Post explained, this idea won’t really work.
Need more? The Hill talks to Republicans who also explain why their colleagues’ idea isn’t actually an option:
“‘The economic impact of the United States government not honoring … literally billions of dollars’ worth of domestic commitments, bills, beneficiaries, I think it would change the nature of the United States,’ said Steve Bell, a former Republican staffer with the Senate Budget Committee who is now at the Bipartisan Policy Center. ‘Call it a default, call it a technical default; it doesn’t make any difference. You’re not paying the bills you owe on time and in full.’…. ‘As a practical matter, [prioritizing your bills] just can’t be done,’ Bell said.”
“Tony Fratto, a former Treasury official and spokesman in George W. Bush’s administration, said prioritizing payments would be more difficult than it sounds. The government owes daily payments for debt servicing, Fratto noted, and the receipts that Treasury brings in from day to day can vary wildly…. ‘I think anyone who thinks this is politically wise has lost their mind,’ said Fratto, who is now a partner at Hamilton Place Strategies.”
Away at their retreat, a few sane Republicans seem to be (rightfully) concerned that their tactics on fiscal issues – like being open to a default and shutting down the government – are losing the support of the American people. According to The Hill:
“‘Majorities are elected to do things, and if they become dysfunctional, the American people will change what the majority is,’ Rep. Tom Cole (R-Okla.), a House deputy majority whip and a former National Republican Congressional Committee chairman, told The Hill.
“Cole cautioned that a refusal to compromise would ultimately land the GOP a bad deal.”
Let’s hope his colleagues are listening.