How Capitol Hill sniping could set off a national debt ceiling bomb
Even as both parties cite the need for progress on the budget, the partisan sniping is becoming unusually personal. Could markets get the jitters if the rancor lasts up to the debt ceiling deadline?
Congress’s turn this week to unusually pointed and personal attacks could signal trouble as lawmakers work to close a deal on raising the debt ceiling, now set at $14.3 trillion.Skip to next paragraph
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Instead of rallying the Congress, President Obama’s call on Wednesday for a more “balanced approach” to the nation’s deficit crisis – meaning the deficit should be closed with both spending cuts and increased tax revenues – set off more intense rounds of sniping on Capitol Hill.
Conventional campaign wisdom rewards “going negative.” To not return opposition fire in kind – and then some – is viewed as weakness. But lawmakers face another concern as they grapple with a debt crisis set to take hold Aug. 2 – that their toxic rhetoric could have the unintended consequence of convincing US creditors that Washington can’t or won’t solve its debt crisis.
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“You’re dealing with a tactical nuclear weapon here. You don’t want to be playing with the timing device right down to the last second,” says David Walker, former US comptroller general and a founding member of No Labels, a bipartisan advocacy group.
If the harsh partisan sniping and gridlock over the debt crisis continues, “you could see a market reaction a week before Aug. 2, if it looks like things aren’t coming together,” he says.
Senate Democrats spent their last day in session this week blasting Republicans for sacrificing the most vulnerable Americans to protect tax breaks for owners of yachts, corporate jets, and race horses, and corporations that ship jobs overseas.
Sen. Charles Schumer (D) of New York, who is charged with policy and messaging for the Senate Democratic caucus, charged on Thursday that Republicans’ “slash and burn approach” to deficit reduction had deliberately undermined the nation’s economic recovery.
“We need to start asking ourselves an uncomfortable question: Are Republicans slowing down the recovery on purpose for political gain in 2012?” he said, in a speech before the Economic Policy Institute in Washington.
It’s a theme some other Democrats have voiced previously, but mainly speaking off the record. The high visibility and timing of these remarks at a critical point in the debt talks give them special prominence.
“The result is that Republicans aren’t just opposing the president anymore. They are opposing the economic recovery itself – and all that means for America’s working and middle class families,” Senator Schumer added.
If Republicans refuse to consider tax increases as part of a compromise package, “they are threatening all of us, the whole country, with economic catastrophe, in order to protect the sky-high income of millionaire hedge fund managers and offshore tax avoiders,” said Sen. Carl Levin (D) of Michigan, speaking from the floor on Thursday and referring to two of the loopholes that Republicans have rejected as part of a deficit deal.