The GOP's unprecedented debt ceiling brinksmanship that began four years ago didn't just cost the Treasury billions of dollars in higher borrowing costs. American consumer confidence took a nosedive during the standoff in the summer of 2011:
and the Christian Science Monitor
explained, the GOP's debt ceiling debacle was the main culprit for sagging confidence and job creation:
Why has the job market cooled so much? An important factor, many economists say, is that signals from government lately have been hurting rather than helping confidence. The protracted talks over the nation's debt ceiling this summer appeared to dampen the spirits of consumers and businesses alike.
On that point, S&P left little doubt
in pointing the finger at the kamikaze conservatives in Congress:
A Standard & Poor's director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default -- a position put forth by some Republicans. Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that "people in the political arena were even talking about a potential default," Mukherji said. "That a country even has such voices, albeit a minority, is something notable," he added. "This kind of rhetoric is not common amongst AAA sovereigns."
And S&P didn't just blame Republican default deniers for the Tea Party downgrade of 2011
. In June 2013, the rating agency worried about continued GOP skullduggery
even as it raised the outlook for U.S. debt:
Although we expect some political posturing to coincide with raising the government's debt ceiling, which now appears likely to occur near the Sept. 30 fiscal year-end, we assume with our outlook revision that the debate will not result in a sudden unplanned contraction in current spending--which could be disruptive--let alone debt service...
We believe that our current 'AA+' rating already factors in a lesser ability of U.S. elected officials to react swiftly and effectively to public finance pressures over the longer term in comparison with officials of some more highly rated sovereigns and we expect repeated divisive debates over raising the debt ceiling. We expect these debates, however, to conclude without provoking a sharp discontinuous cut in current expenditure or in debt service.
That those "divisive debates" are continuing into the fall of 2015 is especially ironic. After all, as the reliably Republican Wall Street Journal
acknowledged two weeks ago, a "Spending Battle Looms Even as Deficit Shrinks
." That's exactly right. Uncle Sam's annual budget deficit has been slashed by two-thirds since President Obama entered the Oval Office. Adjusting for inflation, federal spending has been lower every year
since Barack Obama first took the oath of office on January 20, 2009. That's why even House Speaker John Boehner (R-OH) and Rep. Paul Ryan (R-WI) admitted more than two years ago that the United States faced "no immediate debt crisis
But there is a final irony. Since 2011, the GOP has been the first modern political party with both the intent and the votes to trigger a U.S. default. Republicans like Ted Cruz and Marco Rubio have been willing to kill the American economy by holding it hostage unless they receive the ransoms they demand (i.e. massive spending cuts, Obamacare repeal, no funding for Planned Parenthood, etc.). And they did this despite the dire warnings of GOP leaders
. As I noted in January:
You don't have to take my word for it. Just ask Republican leaders like Rep. Paul Ryan (R-WI), Sen. Lindsey Graham (R-SC) and House Speaker John Boehner. In 2011, Ryan acknowledged that "you can't not raise the debt ceiling." Graham warned "the consequences for the entire global economy" resulting from a first-ever American default "would be catastrophic." Four years ago, Speaker-elect John Boehner issued this dire assessment if Congress did not increase Uncle Sam's borrowing authority to pay bills the federal government had already incurred: "That would be a financial disaster, not only for our country but for the worldwide economy."
Now, the GOP has a double deadline—on the budget and the debt limit. It's no wonder economists are worried.