There is a very interesting post on Crooks & Liars about the Republicans’ true goal in this debt ceiling melodrama currently playing out in Washington. According to the article, Senate Majority Leader Reid is calling the Republican’s bluff. According to Matt Yglesias (a columnist at ThinkProgress.org):
In the debate over the debt ceiling, for example, Republicans have sought to portray themselves as having two bottom lines. One is that any increase in the debt ceiling must be met dollar-for-dollar with spending cuts. The other is that no revenue increases can be part of the deal. What Harry Reid did yesterday was essentially call the GOP’s bluff by outlining a plan that raises the debt ceiling by $2.7 trillion and includes $2.7 trillion in spending cuts, a healthy share of which comes from winding down the wars in Iraq and Afghanistan.
Republicans are rejecting this even though it nominally meets their demands. Why? Because it doesn’t achieve either of their two real objectives. In particular, the plan doesn’t cut Medicare, which means that Democratic party candidates for office in November 2012 and 2014 can accurately remind voters of the content of the Republican budget plan. In case you forgot, this plans repeals Medicare.
The three people named in the following quote are Stuart Varney, a business reporter at Fox, and Steve Doocy and Brian Killmeade, two of the three hosts of Fox’s morning program ‘Fox And Friends.’ Back to Crooks & Liars.
So here we are with a deal that satisfies (sort of) the “no revenues” requirement alongside the “cut dollar-for-dollar” spending requirement. And as you’ll see from Stuart Varney, the answer will still be “no”, just as it has been all along.
Varney: That’s why I say, the likelihood of this downgrade (*) — let’s be clear — a downgrade means you lose your financial reputation, you’re not the gold standard any longer.
Doocy: But it’s different than default.
Varney: It is different from default. I am now saying a downgrade now looks very likely, bearing in mind this chaos over the weekend and this Harry Reid plan which means absolutely nothing to investors.
Killmeade: It seems as though they’d say if we do something drastic enough that shows people that we’re on a fiscal sustainable path — something Titanic — we could avoid that, don’t you agree?
>Varney: I would agree with that. If we got our house in order and said we’re going to tackle entitlements, we’ll go after this, we’ll do something concrete. If you did that, the likelihood is that the stock market would go up.
Unspoken but implied: The likelihood is that you’d get a deal on exactly the terms Republicans want. Destruction of the social safety net in exchange for an unchanged credit rating and raised debt ceiling.
(*) A downgrade means a reduction in the United States’ credit rating from AAA, where it has always been, to something lower. Varney says such a reduction “looks very likely.” This would immediately increase interest rates. I read recently somewhere that a 1% increase would increase the annual cost of servicing the national debt by $130 billion dollars. It’s currently about $160 billion, with the AAA rating, so this would nearly double it.
This reveals that the Teabaggers would rather see people die than take any sort of fiscally responsible action. This debt ceiling crisis is entirely of their making. Cutting trillions out of the Federal budget is the worst thing that can be done during a depression, and it will put a lot more people out of work and take a great deal of money out of the economy. The only sensible thing to do is raise taxes on the millionaires and billionaires, and ensure that corporations which make billions in profits cannot get away with paying little or no taxes. The huge majority of Americans believe this, over 70% at least. Congress and the President work for us, not the super-rich and the corporations, no matter how much they would prefer it.
Remember, too, that the national debt nearly doubled under President Bush and three Republican Congresses, from about $5 trillion to nearly $10 trillion, and that trying to repair the economy that the Bush-era Republicans nearly destroyed has cost another $2 trillion or so. It’s a shame that angry constituents cannot recall their venial and hypocritical representatives like the voters in Wisconsin are doing with their local ones.