We get that Republicans don’t care about folks like us. We know they are willing to stop Social Security payments, and payroll for the members of America’s armed services rather than raise the debt ceiling. We get it, we really do.
But to tank the American, and likely the global, economy just to give their lame candidate (whoever it might be) a chance at taking down Obama in 2012? Exactly that is starting to look to like their best strategy.
It’s not just Americans drawing a line between a House vote not to extend the debt ceiling and economic setbacks. Our friends across the pond are making the same observation.
Blogger “R.A.” at Britain’s The Economist predicted with exact accuracy on June 1 that such moves would mire economic growth, and decried these self-inflicted wounds. Our stock markets dropped that same day.
R.A. begins with the big picture, the one tea partiers and FOX News miss.
There are one-off factors contributing to the slowdown, the Japanese earthquake and subsequent economic slowdown chief among them, but it’s hard to avoid the conclusion that America is joining in the broad global economic deceleration which appears to be underway…Chinese industrial figures are showing an easing in activity, and India’s economic growth slowed sharply in the first quarter. All signs in Europe point to deceleration, threatening to exacerbate the euro zone’s crisis. Things should—should—turnaround as the year progresses…But fiscal and monetary tightening, or new shocks, could prevent this.
Did you catch that? Fiscal and monetary tightening are exactly the wrong way to go.
America’s government is making its economic road harder than it needs to be. Debt problems loom, but there is no immediate fiscal crisis and no need for drastic short-term cuts…China is a patient investor. It wants America to take steps toward fiscal sustainability, but it’s happy to have this happen over a 5- to 10-year period. By cutting drastically now, America is undermining its economy for no good reason.
Actually there’s a very good reason — if you’re Republican. Tanking the economy is the single best way to hurt the man who got Bin Laden, who will have brought most of the troops home from Iraq and Afghanistan by Election Day 2012, who passed health care reform, and who has, so far, not a single scandal as president.*
An effective way to bring down the American economy is to make our debt radioactive. And that’s easy enough. Just start missing payments.
Trouble in Europe and a slowdown in Asia have made the safe haven of American government debt more attractive. Which makes the tussle over America’s debt ceiling look even more unnecessarily dangerous. The other consistent message from Chinese officials on debt matters was that any failure to make good on American obligations would be catastrophic. Even a very short disruption in payments, of a week or two, would be totally unacceptable.
…the decline in Treasury yields indicates the nature of the fire with which legislators are playing. If Congress called into question the safety of the one safe asset for which markets have an almost unlimited appetite, all hell would break loose.
Republican translation: We win!
Jon already noted that few are blaming the falling stock market on that House vote. Fewer still are saying what I am: that Republicans don’t want the economy to recover. After all, what else have they got?
* Unless you consider a clumsy toast to the queen a scandal. Still, it hardly compares with throwing up on the Japanese prime minister.