There is a dangerous idea gaining hold in the Republican Party that a brief default on American debt could be acceptable if it forces deeper cuts by the White House.
As the Aug. 2 deadline to increase the nation’s $14.3 trillion borrowing limit fast approaches, the idea — once limited to the fringes of the party — is becoming more mainstream.
Establishment Republicans, including former Minnesota Gov. Tim Pawlenty, are backing a short-term default if it leads to deep, immediate spending cuts.
Jeff Sessions and Paul Ryan, the top Republicans on the Senate and House Budget Committees, have also said failure to raise the debt limit would not trigger immediate catastrophe.
Former Minnesota Congressman Vin Weber, a Republican strategist, said the idea that a short-term default would not be a problem “is definitely becoming a mainstream belief.”
The concept of allowing the nation to go into default — even a short-term “technical” one — for the first time in its history is irresponsible.
It’s true that the government could likely shift funding to cover the payment of most or all debts for a short time.
But even if that were to occur, the damage would be severe, long-term and increase government spending.
Even the briefest “technical” default would erode the most important card America holds in economic transactions: Trust.
If investors saw that the government was willing to go into default, they would charge higher interest when they bought government securities. Even a one-tenth-percent interest rate increase would cost the country hundreds of billions of dollars over the coming decade — adding to, not decreasing, the deficit.
Republicans and the Obama administration must stop their game of chicken and find compromise that will deeply cut spending, possibly increase tax revenues and, at all costs avoid a default on national financial obligations.