A group of 248 economists, six of whom are Nobel Prize winners, sent a letter to Congressional leaders yesterday demanding a clean vote to raise the debt-ceiling – arguing that failure to do so could have, “a substantial negative impact on economic growth.” The IMF issued a similar warning too.
But as President Obama drew a line in the sand yesterday in debt-limit negotiations demanding that tax loopholes for millionaires, billionaires, and transnational corporations be closed – and Republicans drew a line in the sand on behalf of those tax loopholes – a debt-limit deal looks more and more unlikely. And as Secretary of the Treasury Tim Geithner’s debt-deadline of August 2nd draws closer – some are looking at what a post-August 2nd America looks like if the debt-limit is not raised – and it’s not pretty.
While the United States may not actually default on it’s debts – it WILL have to cut off many day-to-day payments to critical programs around the country and prioritize its debts. On August 3rd – the day after the deadline – our nation will owe $32 billion – but will only have about $12 billion in revenue to pay up. That means about $20 billion will need to be cut out immediately – in just one day.
But here’s the thing – figuring out which bills get paid and which ones get pushed off – is solely up to Treasury Secretary Tim Geithner and President Obama. So if the Republicans REALLY want to play hardball on the debt-limit – then President Obama should hold them accountable and put their states on the chopping block first.
That could mean cutting off critical transportation and other federal assistance funds – and even Social Security payments – to red states represented entirely by obstructionist Republicans. While this isn’t an ideal situation – it is President Obama’s secret weapon to force Republicans to come to the table and compromise. Once folks in Eric Cantor’s Virginia district see their Social Security payments cut off – you can bet Cantor’s office will be flooded with calls from constituents demanding he raise the damn debt ceiling.
Let’s put the real consequences of their obstructionism in their face – and watch the Republicans blink.