MARTIN SCHRAM: Unintended economic consequences
In the safety of their mountain caves, or maybe in concrete-walled suburban sanctuaries near the capital of one of our nominal allies, terrorist leaders are surely plotting their next attack on the United States of America.
But those leaders of global terror lack the power to pull off the most menacing deeds of their vile fantasies: They can’t hit the United States government so hard it grinds to a paralytic halt. They can’t undermine the foundation of the entire global economy by weakening the mighty U.S. dollar. And they can’t transform the world’s economic superpower into a deadbeat nation that defaults on its debts for the first time ever.
Meanwhile, in the safe sanctuaries of their congressional offices, leaders of the small but fractious Republican faction known as the tea party have been plotting attacks upon the same target: the U.S. government. Frighteningly, they unintentionally may accomplish what the terrorists cannot. Already, they have transformed House Republican leaders into their personal hand puppets, manipulating them into shutting down the federal government Tuesday. Now they’re planning to block, in a couple of weeks, the once-routine raising of the debt ceiling, which has always allowed the United States to pay its bills.
Let us be clear: In their hearts, the tea party’s congressional leaders and their many followers are true patriots. They would be the first to battle any miscreant who launched attacks that would harm Americans.
Yet, by their actions, misguided tea party patriots may trigger damage and dysfunction that terrorist evil-doers would love to claim credit for causing.
Intoxicated by their suddenly supersized clout, the tea party leaders ignored urgent warnings from wiser conservatives. We are not talking here about sound bites from politicians playing partisan politics. The U.S. Chamber of Commerce and the American Bankers Association warned tea party leaders that their hopeless effort to defund the Affordable Care Act — commonly called Obamacare — would have negative consequences for ordinary Americans.
“It is not in the best interest of the employers, employees or the American people to risk a government shutdown that will be economically disruptive and create even more uncertainties for the U.S. economy,” the U.S. Chamber of Commerce warned in a Sept. 27 letter signed by 236 business organizations and trade associations. “Likewise, we respectfully urge the Congress to raise the debt ceiling in a timely manner and remove any threat to the full faith and credit of the United States government.”
American Bankers Association President and CEO Frank Keating, former Republican governor of Oklahoma, was more blunt. He warned in a Washington Post commentary: “The respect and admiration that the United States and its institutions inspire around the world are based on the certainty that when our nation makes a promise, we keep it. Unfortunately, Congress seems poised to undermine U.S. credibility at home and abroad by taking the extraordinary step of reneging on bills that our nation has racked up. Ordinary Americans will bear the brunt of the damage if our leaders don’t prevent the United States from defaulting on its debt for the first time in history. ... If our nation defaults on its nearly $17 trillion in debt, the harm is likely to be measured in hundreds of billions of dollars.”
How much? The nonpartisan Government Accountability Office estimated that when Republicans merely delayed raising the debt limit in 2011, the uncertainty cost U.S. taxpayers $1.3 billion in increased interest costs that year alone.
Then there are the costs we pay in jobs either cut or never created. The nonpartisan Congressional Budget Office estimated 750,000 jobs have been lost since the sequester and its federal budget cuts began March 1. But the actual number is likely higher. During the 2012 battle over the sequester, federal agencies stopped hiring and contracting. And contractors, anticipating the cuts, canceled planned hirings a year before the sequester began.
That is why the impetuous tea party puppeteers should rethink their knee-jerk rejection of warnings from savvy, sane fellow conservatives. Beware and be wary: Unintended consequences can wreck America’s still-fragile economic recovery.