Lindsey Graham Promises Global "Financial Collapse and Calamity" Over Debt Ceiling
It's bad enough that obstructionist Republicans in Congress have shattered the record for filibusters, blocked President Obama's judicial at an unprecedented rate and stonewalled economy-boosting legislation like the American Jobs Act. Now for the second time in as many years, extortionist GOP leaders like South Carolina Senator Lindsey Graham are again refusing to raise the debt ceiling of the United States unless their budgetary blackmail is paid. And as it turns out, Graham is promising to follow through on his threat to trigger a U.S. default even though he said it would produce "financial collapse and calamity throughout the world."
After last year's debt ceiling stand-off, Senate Minority Leader Mitch McConnell declared that the nation's borrowing limit is "a hostage that's worth ransoming." Future requests, he warned, "will not be clean anymore." True to their leader's word, Senators Bob Corker (R-TN) and Graham proclaimed the debt ceiling is their "leverage" to extract draconian cuts to entitlement spending. As Graham told Fox News, President Obama better start "maning up" on Medicare cuts--or else:
"In February or March you have to raise the debt ceiling. And I can tell you this, there is a hardening on the Republican side. We're not going to raise the debt ceiling. We're not going to let Obama borrow any more money or any American Congress borrow any more money until we fix this country from becoming Greece. That requires significant entitlement reform to save Social Security from bankruptcy and Medicare from bankruptcy. Social Security is going bankrupt in about 20, 25 years. Medicare is going bankrupt in 15 or 20 years."
And in January 2011, Senator Graham explained to CNN's Wolf Blitzer what that "or else" was. If President Obama didn't agree to agree to cut discretionary spending to 2008 levels and slash Social Security, Graham announced his GOP would kill the economy:
"Let me tell you what's involved if we don't lift the debt ceiling: financial collapse and calamity throughout the world. That's not lost upon me. But we've done this 93 times. And if we keep doing the same old thing, then that is insanity to the nth degree."
Now, while Graham's bogus claims about the supposed bankruptcy of Medicare and Social Security earned him a "Three Pinocchio" rating. His Greece analogy, too, was debunked long ago. But his ominous prediction of "financial collapse and calamity throughout the world" is spot on. As I wrote back in June 2011:
A new analysis by the Bipartisan Policy Center concluded that failure to boost the debt ceiling by the August drop-dead window would force the U.S. Treasury to immediately slash spending by 44%. As The Hill reported, "On an annualized basis, the cut in spending alone is a 10 percent cut in GDP, BPC scholar Jay Powell told reporters." While the IMF similarly cautioned that "the debt ceiling should be raised as soon as possible to avoid damage to the economy and world financial markets," former McCain economic adviser Mark Zandi this week painted a grim portrait of just what that damage would look like.
Zandi's disturbing picture ("we go into recession and my forecast would be blown out of the water") sounded idyllic in comparison to the dystopian hellscape economists, investors and economic policymakers described to Ezra Klein:
Their answers were across-the-board apocalyptic. If the U.S. government is so incapable of solving its political problems that it can't come to an agreement on the debt ceiling, they said, that's basically the end of the United States as the world's reserve currency. We won't be considered safe enough to serve as the investment of last resort. We would lose the most important advantage our economy has in the global financial system -- and we'd probably lose it forever. Skyrocketing interest rates would slow our economy and, in real terms, make it even harder to pay back our debt, which would in turn send interest rates going even higher. It's an economic death spiral we associate with third-world countries, not with the United States.
It's no wonder conservative columnist David Brooks worried that his Republican Party is no longer "a normal party." Former Bush Treasury Secretary Paul O'Neill had a different description of his GOP colleagues:
"The people who are threatening not to pass the debt ceiling are our version of al Qaeda terrorists. Really. They're really putting our whole society at risk by threatening to round up 50 percent of the members of the Congress, who are loony, who would put our credit at risk."
Mercifully, the Republican kamikazes in Congress did not sink the American ship of state in 2011. But the damage to the U.S. economy was significant nonetheless, as consumer confidence plunged and job creation stalled throughout that uncertain summer. In August 2011, Standard & Poors explained its Tea Party downgrade of the U.S. credit rating:
Standard & Poor's director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default -- a position put forth by some Republicans. Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that "people in the political arena were even talking about a potential default," Mukherji said. "That a country even has such voices, albeit a minority, is something notable," he added. "This kind of rhetoric is not common amongst AAA sovereigns."
Yes, threatening to trigger "financial collapse and calamity throughout the world" certainly is "notable" and "not common amongst AAA sovereigns." But it's just another day at the office for Republicans like Lindsey Graham. After all, Graham like John Boehner, Mitch McConnell and other GOP leaders, has another word term for "collapse" and calamity."