This story originally appeared at Truthdig. Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).
This phony debt crisis has now passed through the looking glass into the realm where madness reigns. What should have been an uneventful moment in which lawmakers make good on the nation’s contractual obligations has instead been seized upon by Republican hypocrites as a moment to settle ideological scores that have nothing to do with the debt.
Hypocrites, because their radical free market ideology, and the resulting total deregulation of the financial markets, is what caused the debt to spiral out of control this last decade. That and the wars George W. Bush launched but didn’t have the integrity to responsibly finance. The consequence was a banking bubble and crash leading to a 50 percent run-up of the debt that has nothing to do with the “entitlements” that those same Republicans have always wanted to destroy.
Even Barack Obama has put cuts in those programs into play, warning ominously that a failure to lift the debt ceiling could cause the government to stop sending out Social Security checks. Why, when the Social Security trust fund is fully funded for the next quarter-century and is owed money by the US Treasury rather than the other way around? Why would we pay foreign creditors before American seniors? The answer, offered as conventional wisdom by leaders of both parties, is that we cannot endanger our credit by failing to back our bonds, even though the Republicans have aroused the alarm of the main US credit rating agencies by their brinkmanship on the debt.
What a topsy-turvy world when the same credit rating agencies that gave the thumbs up to the bankers’ toxic mortgage-backed securities and credit default swaps now threaten the AAA rating of US Treasury bonds. According to them, it will not be enough to merely lift the debt ceiling—what had been assumed by both Republican and Democratic presidents to be a routine act. In addition to that, as the credit agency Standard & Poor’s has insisted, more than $4 trillion has to be cut from programs that mostly benefit the victims of the banking meltdown. Otherwise the agencies will downgrade the US credit rating, leading to higher interest rates that will destroy what remains of the US housing market, dim the prospect for any improvement in employment and further enrich the Chinese government and other holders of US debt.
President Obama and the Senate Democratic leadership are clearly poised to cave in to those demands in the spirit of “compromise,” Obama’s favorite word, but the Republicans keep upping the ante. The GOP is shameless: Speaker John Boehner has sanctimoniously responded to Obama’s plea for a bargain that gives up almost everything to the right wing by rebuffing the president on the grounds that the Republican Party is the last line of defense against big government.