Specter of government shutdown still looms

A top Senate Republican signaled on Sunday that GOP lawmakers are ready to engage in brinkmanship over the federal government's debt ceiling, threatening to let the Treasury default on its obligations if Democrats don't agree to drastic cuts in spending.

"This is an opportunity to make sure that the government is changing its spending ways," said Sen. Lindsey Graham, R-S.C., in an interview on NBC's Meet the Press. " I will not the vote for the debt ceiling increase until I see a plan in place that will deal with our long term obligations, starting with Social Security."

Graham, who often positions himself as a bridge-builder between Republicans and Democrats, laid out demands on Sunday that were much closer to the tea party wing of the new Congress. He said he would insist on raising the retirement age for Social Security, limiting old-age benefits for people with higher incomes and slashing non-security discretionary spending to 2008 levels - a cut that Republicans estimated would equal about $100 billion a year.

The federal government's current debt ceiling, the maximum amount it is legally allowed to borrow, is $14.3 trillion. The government's debt is now about $13.9 trillion, and it is expected to bump up against the ceiling sometime this spring.

If Congress refuses to approve a higher ceiling, the Treasury would almost immediately start defaulting on its obligations - an event that most analysts say would have calamitous effects for the United States and for global financial markets that view Treasury securities as the ultimate safe haven for investors. The move would likely force a government shutdown, or force it to immediately slash spending across the board on everything from defense to Social Security. Beyond that, the move would almost certainly set off a panic among global investors that would send markets crashing and interest rates soaring.

Austan Goolsbee, chairman of the president's Council of Economic Advisers, warned on ABC's This Week that failing to raise the debt ceiling this year would be "catastrophic."

"I don't see why anybody's playing chicken with the debt ceiling," Goolsbee said. "If we get to the point where we damage the full faith and credit of the United States, that would be the first default in history caused purely by insanity."

Theatrical showdowns over the debt ceiling have become a regular event over the past decade, and Democrats frequently used such occasions when they were in the minority in Congress to embarrass Republicans and the Bush administration. But in the end, lawmakers always approved increases and financial markets have always assumed that the alternatives were too apocalyptic to be politically plausible.

But that may not be the case this year. Many Republicans associated with the tea party movement, including Sen. Jim DeMint of South Carolina and Rep. Michele Bachmann of Minnesota, have argued for months that Congress should not increase the debt ceiling without immediate and steep spending cuts.

Shortly after the midterm elections last November, Bachman wrote on her blog that the debt ceiling would be "one of the most significant challenges to the start of the 112th Congress'' and that Congress simply cannot continue to operate under the pretense of "gangster government," raising the limit upon our whim."

On Sunday, Bachman made it clear she wanted to use the debt ceiling as a bargaining tool against Democrats.

"At this point, I am not in favor of raising the debt ceiling,'' she said on CBS's Face The Nation. "The Congress has had a big party the last two years. They couldn't spend enough money. And now they're standing back, folding their arms, saying, oh -- taunting us, 'How are you going to go ahead and solve this big spending crisis?' "

Rep. Michael Kelly, a tea party-supported freshman Republican from Pennsylvania, was more fervent.

"Raising the debt ceiling to me is absolutely irresponsible. We've been spending money for so long that we don't have and keep saying, well, it's OK; we'll just raise taxes; we'll find it somewhere."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

    Download
  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

    Download
  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

    Download
  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

    Download
  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security

    Download

When you download a report, your information may be shared with the underwriters of that document.