WASHINGTON - Senator Richard Burr, Republican of North Carolina, a reliable friend of business on Capitol Hill and no ones idea of a bomb thrower, isnt buying the apocalyptic warnings that a default on United States government debt would lead to a global economic cataclysm.
We always have enough money to pay our debt service, said Mr. Burr, who pointed to a stream of tax revenue flowing into the Treasury as he shrugged off fears of a cascading financial crisis. Youve had the federal government out of work for close to two weeks; thats about $24 billion a month. Every month, you have enough saved in salaries alone that youre covering three-fifths, four-fifths of the total debt service, about $35 billion a month. Thats manageable for some time.
As President Obama steps up his declarations about the dire consequences of not raising the debt limit, increasing numbers of Congressional Republicans are disputing that forecast, as well as the timing of when the Treasury might run out of money and the implications of a default, further complicating the negotiating situation for both Mr. Obama and Speaker John A. Boehner, who must find a way out of the impasse.
Both men were counting on the prospect of a global economic meltdown to help pull restive Republicans into line. On Wall Street, among business leaders and in a vast majority of university economics departments, the threat of significant instability resulting from a debt default is not in question. But a lot of Republicans simply do not believe it.
A surprisingly broad section of the Republican Party is convinced that a threat once taken as economic fact may not exist or at least may not be so serious. Some question the Treasurys drop-dead deadline of Oct. 17. Some government services might have to be curtailed, they concede. But I think the real date, candidly, the date thats highly problematic for our nation, is Nov. 1, said Senator Bob Corker, Republican of Tennessee.
Others say there is no deadline at all that daily tax receipts would be more than enough to pay off Treasury bonds as they come due.
It really is irresponsible of the president to try to scare the markets, said Senator Rand Paul, Republican of Kentucky. If you dont raise your debt ceiling, all youre saying is, Were going to be balancing our budget. So if you put it in those terms, all these scary terms of, Oh my goodness, the worlds going to end if we balance the budget, the worlds going to end? Why dont we spend what comes in?
If you propose it that way, he said of not raising the debt limit, the American public will say that sounds like a pretty reasonable idea.
In a news conference, Mr. Obama said repeatedly that those who doubted the repercussions of a default were making a huge mistake.
When I hear people trying to downplay the consequences of that, I think thats really irresponsible, and Im happy to talk to any of them individually and walk them through exactly why its irresponsible, he said. And its particularly funny coming from Republicans who claim to be champions of business. Theres no business person out here who thinks this wouldnt be a big deal, not one. You go to anywhere from Wall Street to Main Street, and you ask a C.E.O. of a company or ask a small-business person whether itd be a big deal if the United States government isnt paying its bills on time. Theyll tell you its a big deal. It would hurt.
The turmoil created by the partial shutdown of the federal government has already sent investors fleeing from stocks to the safe harbor of Treasury bonds, long considered the safest investment on earth because the full faith and credit of the United States government has never been questioned. If that safe harbor is undermined, most economists have said loudly and repeatedly, the impact could be catastrophic.
The U.S. Chamber of Commerce and the National Association of Manufacturers, both bastions of Republican support, sent letters to Congress on Tuesday urging action on the debt ceiling.
Our nation has never defaulted in the past, and failing to raise the debt limit in a timely fashion will seriously disrupt our fragile economy and have a ripple effect throughout the world, wrote Jay Timmons, the president of the manufacturers group.
Some Republicans trust such warnings.
Unlike some of my colleagues, Ive been told by too many people in the financial business that there will be reactions in the market, said Senator John McCain, Republican of Arizona. Of course Im worried.
But the voices of denial are loud and persistent, with some Republicans saying that the fallout from the continuing shutdown and the automatic, across-the-board budget cuts known as sequestration has been less severe than predicted.
Mr. Paul acknowledged that some economists disagreed with him, but said others agreed. Peter Morici, a conservative economist and a frequent guest on Fox Business, dashed off a column on Tuesday in which he argued that House Republicans, by refusing to raise the debt ceiling until they obtain budget reforms, may be the countrys last hope to avoid a financial ruin.
Congressional Republicans have varied arguments. To Representative Paul Broun, Republican of Georgia and a candidate for the Senate, it is a question of ranking the evils.
There are a lot of things that are going to affect our economy, he said. The greatest threat right now is Obamacare. Its already destroyed jobs, its already destroyed our economy, and if it stays in place as it is now, its going to destroy America.
Representative Ted Yoho, a freshman Florida Republican who had no experience in elective office before this year, said the largest economy on earth should learn from his large-animal veterinary practice.
Everybody talks about how destabilizing doing this will be on the markets, he said. And youll see that initially, but heck, Ive seen that in my business. When you go through that, and you address the problem and you address your creditors and say, Listen, were going to pay you. Were just not going to pay you today, but were going to pay you with interest, and we will pay everybody thats due money if you did that, the world would say America is finally addressing their problem.
Representative Justin Amash, Republican of Michigan and a leader of the Houses libertarian wing, said: Theres no way to default on Oct. 17. We will have enough money to make interest payments. The issue is, how do we restructure our government so we dont have to keep hitting the debt ceiling?
And while Representative Trent Franks, Republican of Arizona, conceded that a government that could no longer borrow money would have to curtail some of its contracting, he said Democrats should not get carried away.
Its like everything else here, he said. People on both sides of every argument seem to employ hyperbole when they could just state the truth and it would still be of significant consequence.
Ashley Parker contributed reporting.
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