Posted by on September 19, 2013 in Blog

By Isaac Levey
Legal Fellow


On Wednesday afternoon, Speaker John Boehner (R-Ohio) announced that the House of Representatives will hold more votes in the coming weeks to eliminate or undermine the Patient Protection and Affordable Care Act of 2010 (ACA), better known as Obamacare. Since the Republicans won control of the House in the 2010 elections and handed Boehner the Speaker’s gavel, that chamber has voted forty-one times to undo the most important domestic achievement of Barack Obama’s presidency. Needless to say, none of those votes ever stood any chance of becoming law: the Democratic-controlled Senate never paid any attention to them, and even if by some miracle a repeal vote passed the Senate, it would be vetoed by President Obama. Those votes were meaningless and were always understood as such; they were the political equivalent of the House simply shouting at the President.

These votes, however, will be different. Not because they have any more chance of actually eliminating the ACA, but because of what the upcoming votes are attached to. On Friday the House will vote on a bill to fund the operations of the Federal Government, and next month Congress will have to raise the statutory debt limit so that the United States can pay its bills. The House has moved from empty gestures to repeal Obamacare to literally holding hostage the operations of the government, and the full faith and credit of the United States.

Government Shutdown: Unlikely Disaster

On October 1, the Federal Government will basically run out of money. The Congress has to appropriate any federal spending, and the authorization for most spending will expire at the end of September. If new spending is not authorized, the Government wouldn’t cease to exist completely, but all “non-essential” programs would be suspended. To authorize new spending, Congress and the President can either agree on a totally new budget, or more often, a “continuing resolution” (CR), which provides that funding will continue at basically current levels for however long it lasts (usually anywhere between a month or two to a year). In theory, CR’s are supposed to be stopgap measures that give the President and Congress more time to hammer out an actual budget, but of late they’re the only budget we’ve got. The last full federal budget was, depending on how you define the term, either in 2009, or way back in 1997.

So no one is proposing a full new budget by the October 1 deadline – there just isn’t enough time to reach a responsible agreement. The House proposal, which will be voted on and probably pass on Friday, will fund the government through the end of the year, but it will also strip away funding for the President’s healthcare law. Thus the Republicans have attached an impossible, wild fantasy that could never pass Congress to a bill that absolutely must pass Congress if the Federal Government wants to keep the lights on. They are telling the President and the Senate that if they don’t have their impossible way, they’ll shut down the entire government. If that sounds reckless and irresponsible, it’s because it is.

Fortunately, no one seems to think a government shutdown is likely. The House will pass its stillborn CR on Friday – which the White House has already said President Obama would veto if it somehow became law – and the Senate will just remove the provision defunding Obamacare and pass a “clean” CR that just keeps the government running through the year. The House will grumble, but the most likely result at the end of the day will be that Bohener, who has been in Congress for decades and knows the public will blame the GOP for any shutdown, will get the Senate’s CR through the House. Like the January bill avoiding the “fiscal cliff,” the CR will likely pass with most of the Democratic members of the House, and enough Republicans to get a majority. In other words, although this dance has already prompted sniping between House and Senate Republicans as to who is more anti-Obamacare, I don’t think the Republicans will allow the Government to shut down over their hopeless mission to defeat the ACA. They’ll just come needlessly close, and demonstrate yet again how paralyzed and broken our political system is.

Default: Possible Catastrophe

The more likely possibility – and the one that could be far more hazardous for those American people Congress is supposed to be serving – is that the GOP’s intransigence may cause the United States to default on its debts. Sometime in mid-October, the U.S. Treasury will hit the statutory “debt ceiling,” which is a congressionally mandated limit as to how high the national debt can go. Any further borrowing would require raising that limit. But raising the limit doesn’t mean spending more money we don’t have. Rather, it allows us to borrow money to pay our obligations that are already outstanding. Perhaps borrowing more money to pay back other outstanding debts isn’t responsible fiscal policy, but the debts we have exist, are due, and aren’t payable any other way. Some of those obligations are debts to other countries; some are to Americans who hold government bonds; and some are benefits that have been promised to Americans such as Social Security or government paychecks. But they all represent solemn obligations our Government has made, and Congress’ power to “borrow money on the credit of the United States” carries with it the responsibility of maintaining that credit and keeping our promises.

Two years ago we almost broke that promise. In the summer of 2011, House Republicans’ intransigence caused the U.S. to come closer than we had ever come in history to defaulting on our loan obligations. Congress passed and the President signed a bill raising the debt ceiling on August 1, literally hours before we entered default. Four days later Standard & Poor’s revoked America’s AAA credit rating. This is the equivalent of a bank telling you it has some concerns about lending you money because it’s not sure you’re good for it, so you’ll need a higher-interest loan than someone who was more trustworthy. Not every ratings’ group agreed with S&P, but just the uncertainty was enough to cause the Dow Jones to fall by over 630 points (about 5.6%), its worst drop since the 2008 financial crisis. It’s now clear that the downgrade and the stock market crash halted what fragile progress the economic recovery had made in 2010 and 2011.

That is the situation we might face next month. The Speaker’s office announced yesterday that the bill to raise the debt ceiling will require a one-year delay on implementing all of Obamacare, which is also a nonstarter. President Obama on Wednesday reiterated his stance that he will not negotiate over the debt ceiling this time, at least not in any deal related to the ACA. He accused the Republicans of extortion, saying the debt ceiling had never been used for things like this before. That generalization is false, but Obama is right that we shouldn’t set a precedent for political horse-trading in negotiations like this, which essentially turn the creditworthiness of the United States into a bargaining chip. And if Boehner does have to pass a largely Democrat-sponsored bill to avoid a shutdown, he will be very weak going into the debt ceiling negotiations and may have to capitulate to his intractable right flank and again take us frighteningly close to default.

What Happens Next

The Federal Government has shut down before. It’s unpleasant and painful – it’s essentially a much more drastic version of the sequestration already in effect – but it’s at least an experience we’re familiar with. Default is not. It really is totally unprecedented, and the stock market crash last summer was caused by just the possibility that the Federal Government might not keep its promises. Should the United States actually default on its loans, we would see more than just a cataclysmic market event. The world would see, on full display, the weakness of the United States and its broken political system, a signal of weakness far more powerful than any sent by President Obama’s schizophrenic policy on Syria. It would be perhaps the strongest piece of evidence yet that the United States is just not equipped to handle the twenty-first century.

These consequences might lead you to ask why the House Republicans would put us on this path. It certainly doesn’t make sense politically: voters put more blame on the GOP for the 2011 crisis (S&P all but explicitly said its credit downgrade was partly due to Republicans' categorical refusal to consider tax increases) and polls indicate the public would blame Republicans for a similar result this time. But a recent Washington Post-ABC News poll revealed something astounding: almost 60% of people who don’t want to raise the debt ceiling think that failing to raise it will cause serious harm to the economy. In other words that group – which accounts for about 26% of the population as a whole – favors what they themselves believe is an action that will seriously harm the economy.

Assuming that at least some House Republicans represent that group, then a significant bloc of Members of the United States Congress actually support actions they think will harm the United States. Perhaps they think a little pain now will help in the long term; perhaps they just want the economy to keep lagging in hopes that the President will become less popular and the Democrats will be more likely to lose the next election. Either way, we face the very real possibility that Republicans’ pathological hatred for the Affordable Care Act – or just for this President and everything he does – will take us over the brink we got so close to two years ago.

The ACA was passed by Congress and upheld by the Supreme Court. The Republicans’ only real chance to undo it was by beating President Obama in 2012, and they lost. It is the law of the land, and even Mitt Romney admits this and says the GOP shouldn’t shut the Government down over it. But the House of Representatives might do just that; they are threatening to place the United States of America in default out of nothing but spite. The American people have elected a Congress that is totally unfit for the extraordinary challenges their country faces.

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