The GOP's Deep Denial Intensifies AnD Threatens the Country and the World

Nearly 20 years ago when I was an active Republican I never anticipated that the day would come when I would hope for the GOP's demise and extinction.  Of course, back then I never thought I be witnessing the effort of an extremist rump of the GOP to literally destroy America's and the world's economy, causing hardship and disaster for literally millions of people both here and abroad.  Andrew Sullivan aptly sums up what America and the world now face with the GOP which has become a economic terror organization akin to Al Qaeda:

The purge has worked, hasn’t it? There is effectively no Republican party any more. There is a radical movement to destroy the modern American state and eviscerate its institutions in favor of restoring a mythical, elysian, majority-white, nineteenth-century past. This crisis is proving that more powerfully than even watching Fox. We need to see what is in front of our nose: a cold civil war has broken out between those properly called conservatives, defending the credit of the government, empirical reality, and adjustments to modern life and those properly called radical reactionaries declaring our current elected president and Senate as illegitimate actors, bent on the destruction of America, and therefore necessitating total political warfare, even to the point of threatening to destroy the global economy.

And why is the GOP effort to overthrow the American government and force a default by the United States so frightening?  A piece in  CapitalGainsandGames lays out why sane and rational Americans need to be very, very concerned.  The piece also lays out why the efforts of the GOP saboteurs may not only be unconstitutional but also force an increase in taxes.  Here are article highlights:

In a few weeks, the debt limit will be breached as all of the Treasury’s “extraordinary” measures are exhausted and there will be insufficient cash to pay all of the government’s expenses as they come due. These include payments of principal and interest on the debt. Therefore, default on the debt is almost inevitable unless the debt limit is raised in a timely manner.

While the debt limit and potential debt default don’t impact on tax policy directly, they are important indirectly. If the U.S. Treasury’s ability to borrow is inhibited by a default, that would cause investors to shun Treasury securities and raise interest rates, this will put increased pressure on the budget to raise revenue. That is why Alexander Hamilton discussed the consequences of default in Federalist 30, which relates to the federal government’s taxing power. Said Hamilton:

In the modern system of war, nations the most wealthy are obliged to have recourse to large loans. A country so little opulent as ours must feel this necessity in a much stronger degree. But who would lend to a government that prefaced its overtures for borrowing by an act which demonstrated that no reliance could be placed on the steadiness of its measures for paying?

Especially at a time of war, any threat to the Treasury’s financing is a threat to national security. And, lest we forget, the nation is still at war in Afghanistan. Additionally, the recent Syria incident shows that the threat of new hostilities is ever-present. Nor should it be forgotten that 47 percent of the debt held by the public is now owned by foreigners. One can assume that they will not take kindly to any interruption in their interest or principal payments.

The threat of debt default and its impact on national security was very much on the minds of those who drafted the Fourteenth Amendment to the Constitution. The historian Franklin Noll has explained how representatives of the former Confederate states, now back in Congress, were highly disinclined to tax their constituents to pay the debts of the Civil War’s victors – the Confederate debt was repudiated, only the Union debt was repaid. Consequently, the threat of default was a very real one in the immediate postwar period.

To protect against the danger of default, the drafters of the Fourteenth Amendment included the little-known section 4, which reads:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

A number of legal scholars have concluded that this provision makes unconstitutional any law that would call into question or threaten the payment of interest or principal on the debt, including the debt limit.

As an economist, my primary concern is the impact on the economy and interest rates of a debt default, which many Republicans in Congress poo-poo as nothing to be too concerned about. In this respect, I think the views of financial market participants should carry special weight. In the run-up to the 2011 budget deal, which narrowly averted a debt default, a number of top Wall Street economists and executives weighed-in on the potential economic and financial consequences.

In an April 2011 note, J.P. Morgan published an extensive analysis of the “domino effect” of a U.S. default that would spread far beyond those that own Treasury securities. As it explained:

Our analysis suggests that any delay in making a coupon or principal payment by the Treasury – even for a very short period of time – would almost certainly have large systemic effects with long-term adverse consequences for Treasury finances and the U.S. economy. These effects would be transmitted through three primary channels: U.S. money funds, the repo market, and the foreign investor community, which holds nearly half of all Treasury securities. Our main conclusions are as follows:

A technical default raises the risk of a flight to liquidity out of government money funds, potentially triggering an increase in redemptions similar to that seen in 2008.

Even if the technical default is cured immediately, foreign demand for  Treasuries could be permanently impaired.

Finally, on Social Security, it is sometimes said that the payment of benefits is never a problem as long as there are sufficient assets in the Social Security trust fund to pay them. The problem is that the Treasury securities in the trust fund are not marketable. If the Treasury lacks the cash to redeem the securities itself there is no practical way of obtaining the cash to pay benefits in the event that the debt limit becomes severely binding.  

If the consequences of such brinksmanship fell only on elected officials, it wouldn’t matter. But given the potentially large economic costs of a debt default, the U.S. economy and average Americans could suffer a considerable amount of collateral damage.

There is a lot more in the article.  Yet none of the dire predicts mean a whit to the GOP saboteurs.  They literally do not give a damn about the millions of lives they are poised to damage.  It's all about trying to nullify two national elections and nullifying a Supreme Court ruling.  These people are economic terrorists.  What they are doing is likely unconstitutional and I would posit that these people are traitors.  They need to be treated as traitors.  They certainly need to be removed from their offices in Congress.