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As Obama Holds the Line, Republicans Claim Default Wouldn’t Be That Bad

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As we enter day 9 of the government shutdown it seems the two sides will remain in their starting positions. In a press conference given yesterday President Obama reiterated his unwillingness to negotiate over a continuing resolution to fund the government or the debt ceiling saying those actions are not favors to him but the responsibilities of good governance. The Republicans are not only sticking to their initial demands for concessions in order to fund the government and raise the debt ceiling, but are now actively playing down concerns about default.

As President Obama steps up his declarations about the dire consequences of not raising the debt limit, increasing numbers of Congressional Republicans are disputing that forecast, as well as the timing of when the Treasury might run out of money and the implications of a default, further complicating the negotiating situation for both Mr. Obama and Speaker John A. Boehner, who must find a way out of the impasse.

This well established right-wing defense mechanism – retreating into fantasy to avoid a difficult reality – could change the game. Either Obama and the Congressional Democrats give in or actually let the GOP crash not just the US but the world economy.

A surprisingly broad section of the Republican Party is convinced that a threat once taken as economic fact may not exist — or at least may not be so serious. Some question the Treasury’s drop-dead deadline of Oct. 17. Some government services might have to be curtailed, they concede. “But I think the real date, candidly, the date that’s highly problematic for our nation, is Nov. 1,” said Senator Bob Corker, Republican of Tennessee.

Others say there is no deadline at all — that daily tax receipts would be more than enough to pay off Treasury bonds as they come due.

It’s all a hoax, you know, like global warming.

One point that seems to be getting left out of the mainstream/corporate media coverage is that an economic crisis that results from defaulting on US debt obligations will first and foremost wreck the 1%. The US treasury bond is the lynchpin to the global financial system, a default would first cause a panic attack in financial markets and the top 1% own almost 50% of all financial assets. And given that the Federal Reserve has already run out of tricks and is down to money printing it is unlikely they would be at all effective in stopping a financial crisis caused by default. In other words, default would be the end of the upper class as we know it.

So, ironically,  if the Tea Party gets their way they will be destroying the very “job creators” they so celebrate in their Ayn Randian fantasies.

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Dan Wright

Dan Wright

Daniel Wright is a longtime blogger and currently writes for Shadowproof. He lives in New Jersey, by choice.