What Republican Default Will Mean For Everyday Americans
By Congressman Bill Pascrell, Jr.
Washington, DC, May 10, 2023
America is staring down the barrel of economic armageddon. The doomsday device is in the hands of Republican lawmakers.
This isn’t your run-of-the-mill political gamesmanship — by next month, we could be grappling with a financial meltdown far worse than 2008.
The House of Representatives is in session for just 12 days before June 1, which the Treasury Department warns could be the drop-dead date to prevent an unprecedented default on America’s bills.
Nothing about this is ordinary. Congress has responsibly addressed the debt ceiling 49 times under Republican presidents and 29 times under Democratic presidents. It’s fiscal lunacy to use America’s creditworthiness as a bargaining chip. But here we are, barreling toward self-inflicted disaster.
For those who confuse defaulting with a government shutdown, it’s understandable. It’s harder than ever to separate partisan noise from genuine crisis. But while a shutdown can be painful, defaulting on our debts would be cataclysmic.
Republicans are counting on this confusion and complacency to get away with gambling our country’s health away. So, it’s vital to make very clear what default would mean for everyday Americans.
Social Security checks will cease and Medicare reimbursements will freeze, leaving tens of millions of Americans unable to eat or pay for essential care.
Our military servicemembers and federal law enforcement would see their pay cut off.
The collapse of available credit would send shockwaves through the economy. We’d see job losses in the millions, small businesses decimated, nationwide bank runs for the first time since the 1930s, markets thrown into turmoil, and retirement accounts vanishing like mist.
Over a decade ago, the Ways and Means Committee heard testimony from the former Chief Economist of the International Monetary Fund likening the impact of default to the Great Recession, only ten times worse.
The global ramifications would be just as devastating. Our treasury debt is considered the world’s safest asset and the dollar acts as the globe’s reserve currency. World confidence in our economy would be shattered, perhaps irreparably. This would be music to ears of the Chinese Communist Party.
These consequences are clear and undeniable. But Republicans have waged a relentless campaign to distract the public from the horrifying reality of their reckless gambit. Don’t be fooled.
Republicans want you to believe threatening economic catastrophe is about fiscal responsibility. But blocking America from paying its bills is a catastrophic betrayal of our duty to govern.
If Republicans were truly committed to deficit reduction, they’d come to the table without their thumbs poised menacingly over the detonator that would demolish our financial system.
Of course, engaging in good faith would require Republicans snapping out of their collective amnesia over how we got here. President Clinton left office in 2001 running our last budget surplus. That was before two decades of GOP tax cuts for corporations and the ultra-wealthy blew holes in our budget big enough for Godzilla to stroll through.
Republicans are holding our economy hostage and claiming they have the solution to a budget shortfall they caused in the first place. Their ransom demands are utterly shameless.
Republicans want to cut off food benefits for working families, steal health care from 600,000 poor people, impose brutal austerity measures, sabotage tax fairness and kill millions of energy manufacturing jobs.
The sad irony is the Democratic manufacturing agenda my Republican colleagues are so desperate to unwind has been a boon for their own constituents — creating over 58,000 jobs in GOP districts so far.
And Republicans’ plan to roll back funding for more audits against wealthy tax cheats would drive up the deficit by over $120 billion. The Republican bill is a cynical ploy, a masquerade designed to make it look like Republicans are governing.
If this feels like déjà vu all over again, it is. In 2011, 2013, and 2015, Republican-driven debt extortion led to devastating consequences.
Each episode resulted in widespread economic turmoil: downgraded credit ratings, skyrocketing borrowing costs, crippled job growth, and tumbling consumer confidence. Even entertaining defaulting endangers financial stability.
I’ve had a front row seat every time Republicans have endangered America’s credit. We only escaped calamity by the skin of our teeth, and that was before hardline extremists completely commandeered GOP leadership.
The truth is cooler heads might not prevail this time. As Americans saw in January, House Speaker Kevin McCarthy did everything short of selling the chamber desks to win the votes of enough fanatics to seize power; if given the choice between saving his job or saving the U.S. economy, I have little faith in the Speaker.
There are demands that President Biden “negotiate” with House Republicans. I’m puzzled by this. What are we negotiating? That Republicans will not destroy the country? Any pirate that wheedles concessions will only be emboldened to take new hostages next time.
No party fit to lead jeopardizes the foundation of our economy to get their way. Americans must understand the stakes. If Republicans breach the debt ceiling, none of our lives will be the same.