Business groups warn Tea-Publicans not to take the federal debt ceiling hostage

Posted by AzBlueMeanie:

Now things are starting to get interesting. The business organizations who are the allies of the Tea-Publican Party are telling the Tea-Publican economic terrorists not to take the federal debt ceiling hostage. Business leaders to GOP: No more debt limit hostage taking!

On MSNBC this morning, the head of the powerful U.S. Chamber of Commerce
called on Republicans to stop using the threat of default to get the
spending cuts they want.

Chamber president Tom Donohue didn’t do this quite as directly as he
might have, but the plain meaning was clear. This is significant,
because in doing this, he went further than other business leaders, who
have merely issued a general call for a hike in the debt ceiling without
pointing a finger at Republican debt ceiling hostage taking. Donohue,
by contrast, said he wants to see a stop to the tactic of using the debt ceiling as leverage.

“When you get down to defaulting on the debt, you have a very, very
serious question: What will happen to interest rates, what will happen
to our relationships around the world?” Donohue said in an interview
with Chuck Todd. “It could really hurt the economy.”

* * *

[H]e added: “I think we have to let the folks up on the Hill use
the assets they have while at the same time trying to tell them that
using the debt is the least desirable of those.”

This is a key quote. The head of the Chamber, one of the most
powerful GOP-aligned interest groups in the country, is essentially
saying that using the debt ceiling as leverage to force spending cuts
has to stop
. This comes after the Financial Services Roundtable, the Business Roundtable, and other business groups all are insisting more generally on a debt ceiling hike.

Donohue’s quote is also a reminder of something that gets lost in the
debate: Default itself isn’t the only thing that would damage our
economy; the mere threat of default is also potentially
damaging. Remember, in 2011, Standard and Poors downgraded U.S. debt
partly because of GOP debt ceiling brinksmanship well in advance of any default. Small wonder Donohue wants an end to the nonsense.

* * *

Donohue’s subtle warning to Republicans is the latest sign not only that
the GOP’s threat of default is untenable in practical terms, but that
Republicans can no longer be perceived to be willing to default — which only further undermines whatever leverage they supposedly had in the first place.

0 responses to “Business groups warn Tea-Publicans not to take the federal debt ceiling hostage

  1. “Change of plan: Treasury rules out trillion-dollar platinum coin” It includes a free Ezra Klein quote so nobody need worry about being intellectually insulted.
    http://twitchy.com/2013/01/12/change-of-plan-treasury-rules-out-trillion-dollar-platinum-coin/

  2. Thank you for the reference. I appreciate it.

    I continue to keep an eye out for what the Chinese government (owed 1.1 trillion dollars) and Japanese government (owed 1.1 trillion dollars) are of a mind to do if no progress is made.

    http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

  3. “Is there a article or quote or URL where an actual Republican states that his intent is to default on the debt?” Yes there is. http://thinkprogress.org/economy/2013/01/11/1434091/rsc-head-debt-ceiling/

    The new head of the Republican Study Committee — a caucus of ultra-conservative House Republicans — said yesterday that he might favor the United States defaulting on its obligations, rather than raise the debt ceiling. Rep. Steve Scalise (R-LA) posited that, as long as the United States continues to pay interest on its debt, all would be well:

    RSC Chairman Steve Scalise (R-La.) said Obama should pledge to avoid defaulting on Treasury bond payments once the Treasury Department no longer has the means to avoid exceeding the $16.4 trillion debt ceiling.

    “The fact that we continue hitting the debt ceiling is a symptom of Washington’s spending problem, and hitting the debt ceiling does not immediately trigger a default,” Scalise said. “The Treasury Secretary has an obligation to preserve the credit rating of the United States and should pledge to continue making necessary interest payments to avoid default.”

    What this fool is talking about is the bogus right-wing theory of “partial default,” which is like being a little bit pregnant — you either or or you are not. Once you are in default, paying some creditors but not others does not change the fact that you are in default. Paying just the interest doesn’t cut it either. Creditors are entitled to accelerate all of their default remedies on the event of default.

    I represented banks for years on collection of debts in default. This theory was a non-starter.

  4. Is there a article or quote or URL where an actual Republican states that his intent is to default on the debt? I can’t imagine it would be difficult to document John Boehner or Mitch McConnell if they had made such a quote.

    In any case I wonder when the as you call them “media villagers” will start asking the actual creditors of the US Government what action they recommend.

    http://www.hulu.com/watch/110317 < - Faux Chinese President Hu Jintao seems rather worried about being payed back in clunkers in this SNL bit. Perhaps he would be open to being repaid with a trillion dollar coin (probably not)? For those of us who have had our fill of credentialed commentators and prefer to be advised by cartoons when it comes to the debate over trillion dollar coins and the federal debt ceiling. The 2nd cartoonist below actually has a third option which I am certain many Americans will consider a reasonable option. WARNING: Do not click on this link if you are insulted by comics! http://hotair.com/archives/2013/01/11/beeler-ramirez-on-coin-tricks/