U.S. pays for shutdown, default crisis

Suppose you are the loan officer in a bank.  Today, you have three customers coming in.

Customer A arrives. This customer has a good and stable income, pays bills on time, has made debt payments reliably and is a community leader.

Then comes Customer B.  This customer has just had a pay cut, lives from paycheck to paycheck, has barely kept current with loan payments, but reassures you about future intentions to make loan payments a high priority.

Finally, here’s Customer C.  This customer has no job, has repeatedly threatened to halt loan payments and is inclined to think the bank could get along all right without the loan being paid off. 

Sound familiar?  It should, because there are people in Washington who fit each of these descriptions. 

The bank?  That’s the lender of all the previous debt on which payments are now due – the American people, financial institutions and foreign countries.  In short, the bank is the world.

Customer A represents the United States playing its usual role as the most powerful nation in the world, a country whose dollar is the standard by which all other currencies are measured.

The dollar is the world standard, because everybody believes that the United States will use all of the resources necessary to maintain its reliability.  In other words, America has always stood behind its debt.

The Washington leaders who have traditionally supported this view were both Republicans and Democrats, people whose politics differed but not to the point of weakening the country.

Customer B represents the members of Congress who said they were willing to shut down the government and to threaten defaulting on the government debt.  Some of them suggested using gimmicks to make loan payments for a few more days, giving them a little more time to try to change Obamacare.

This year, the group included every Republican member of the U.S. House and Senate.

Customer C represents the members of Congress who voted, even at the last minute, against reopening the government and letting it make debt payments.  They attacked others in their party who refused to go along with them.

This group included 144 Republican House members – three-fifths of all GOP representatives – and 18 Republican Senators.

For a while, Republicans in Congress gave a higher priority to “defunding” Obamacare and mandating the Keystone XL pipeline than to safeguarding the dollar and keeping the government in operation.

None of this means that the GOP was wrong on the issues it raised. While they do not control either the Senate or the presidency, they virtually had the obligation to offer their alternate policy views and fight for them.

But there are limits how far people should go in seeking to change national policy.  Finally, a majority of Senate Republicans and a minority of the House GOP came to that view.

Centuries ago, Robert Burns, the Scottish national poet, wished that some power would give us the gift “to see ourselves as others see us.”

Probably, every member of Congress wants the United States to be seen as the world’s greatest power, having the economic and military strength to influence events everywhere on earth to America’s benefit. 

Yet those who shut down the government and brought the country to the brink of default on its debt appear not to recognize that their strategy undermines the world’s confidence in the United States and weakens the American economy.

Countries with which the United States does business are openly worried about the value of the “full faith and credit” of this country.  Countries with which the United States competes could quietly sit back and let this country discredit itself.

Respected economists, including some of the most conservative, warned that the government closure and risk of default would harm the economy, especially the recovery from the crippling recession.  Polls reported that people do not dislike Obamacare to the point of being willing to pay this heavy a price.

Consumer confidence in the economic outlook plunged. That translates into less consumer spending and fewer retail sales, the backbone of the economy.

The pundits are already saying that we will face much the same government crisis in a few months.  The two sides will not agree on a budget, they say, and default will again loom.

If they are right, the cost could be a greater economic impact and more harm to America’s standing in the world.

 
The revival of the traditional GOP, determined to overrule the Tea Party, is the key to preventing this outcome.  Customer B will have to start behaving like Customer A.