Wednesday, June 01, 2011

Republicans Playing Dangerous Games With Economy - Again

Economic turmoil games return/continue. Thanks so much.

"Late yesterday afternoon, Republicans brought a “clean” debt ceiling bill to the House floor for the express purpose of watching it fail. The point was to let a right-wing caucus thump its chest, telling the White House that the hostage strategy — give GOP lawmakers sweeping cuts or they’ll cause a recession on purpose — is still on.

"But the White House already knew that, making yesterday’s little charade the latest in a series of pathetic displays. When the dust settled, the final vote was 97 to 318, with 7 Dems voting “present,” and 9 members not voting at all. Every Republican voted against their own bill, as was predetermined when it was introduced.

"The GOP leadership is well aware of the dangers in stunts like these, so they “scheduled the vote for after the stock market’s close, and in the preceding days called Wall Street executives to assure them that the vote was just for show.”

"It’s all just a big game, which happens to put the global economy at risk. Few seem to believe Republicans would deliberately cause a catastrophe — basic American patriotism should prevent anyone from crushing the country’s economy on purpose — though the “the joke” itself may prove dangerous. As Ezra Klein recently explained, “The danger in this is that as the rhetoric ramps up, the market may not realize this is all just more of Washington’s fun and games. Brinksmanship runs the risk of misjudging what is the last minute, or the maximum amount of uncertainty, that the market will accept before it reevaluates the American government’s capacity to pay its debts back in a timely and smooth way.”

"The question becomes one of whether investors believe Republicans are crazy or really crazy. Yesterday, the GOP’s message was, “We’re pretending to be the latter, but don’t worry, we’re really the former.” The moment the financial industry stops believing that line, there’s cause for genuine alarm."

Via the Washington Monthly

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