The Debt Ceiling Will be Raised. Period.
No matter how much the conservatives in Congress and pundits across the spectrum want this to seem like some kind of colossal showdown, the bottom line is—as always—the bottom line.
Why do I seem so confident in the prediction that the debt ceiling will be raised? First, raising the debt ceiling is what the government does. The debt ceiling has been raised over a hundred times since 1940. Only once was it ever an issue, 1995 when the Republicans under the leadership of Newt Gingrich tried to bluff President Clinton into cutting taxes and entitlements. President Clinton called the bluff, shut down the government and showed conservatives for the raving ideologues that they are. The Republicans were bluffing then, and as will be shown below, they are almost certainly bluffing now.
What? Saint Reagan raised the debt ceiling more than any other president since World War II? Who knew! I’ll bet conservatives were really pissed that he did that.
Clearly, Republicans are not ideologically averse to raising the debt ceiling. As has been demonstrated in earlier posts, Republicans love their big government and their deficit spending despite their protestations to the contrary. Granted, when measured in dollar amounts, Democrats still hold the record.
Now the pundits want to sell the great Manichaean conflict between left and right, and the debt ceiling issue is a prime discoursive arrangement for perpetuating this marketable myth. After all, conflict sells advertising space, even if it is false conflict. Liberals want to perpetuate the myth that conservatives are crazy enough to destroy the full faith and credit of the United States in the name of ideological purity. Conservatives want to perpetuate the myth that they are ideologically pure enough to draw the battle lines with the socialist opposition.
Both claims are false.
Republicans, representing conservatism, are the handmaidens of the corporate elite. Democrats, aren’t much better, though they do have some slight loyalty among the liberal punditry.
So here is the aforementioned “bottom line.” From Open Secrets, the following data.
As you can see, the Republican Party is in the pocket of finance. The GOPs favor from Wall Street is a statistical embarrassment. To be fair, though the investment is clearly lopsided, the money doled out to the Democratic Party is not exactly chump change.
There is no way that the Republican Party is going to discredit US treasury bonds when their patrons rely so deeply on this safe investment. Private pension funds hold over $600 Billion in US debt, while state and local governments carry another $700 Billion. Banks and insurance companies are depending on the United States to pay off on over $500 Billion in treasuries. Mutual funds hold over $800 Billion. All of this otherwise stable debt, US treasuries still considered among the safest investments in the world, is tied in with more risky investments, perhaps carrying the weight of countless private investments.
Any move that might risk these investments would be frowned upon by the corporate elite so ardently served by the Republicans (and only slightly less dogmatically by the Democrats).
Republicans are not crazy, they are regressive neo-feudalists, but they are not crazy. Surely, they are not crazy enough to bite the hands that feed them.