If you sense a note of alarm and panic in the words and actions of former United States Treasury Secretaries then you are reading the mood and tone of their language correctly. If you note the number of posts on this blog over the recent past about this issue you also know this matter impacts us all.
It was reported that former Treasury heads Hank Paulson and Steven Mnuchin made a concerted effort to steer Senator Mitch McConnell towards a sane path when dealing with the debt ceiling standoff. Since the nation is still at the edge of the cliff, and the hours are ticking off, we know that those conversations did not take hold with the senate majority leader. After all, there is a conservative political game to be played, and the Kentuckian will not miss his chance to score something in the process.
The meeting with the Majority Leader has made for some interesting reading in the newspapers today.
Paulson expressed in the meeting a high degree of concern about the dangers and likelihood of a federal default and its implications for the global economy, the people said. Paulson worked closely with McConnell and other lawmakers in 2008 to address the financial crisis.
After the discussion, Paulson told the Biden administration that McConnell is serious that Democrats must approve the debt ceiling hike on their own through the budget reconciliation process, given their control of Congress and the White House and their pursuit of a partisan spending package, the people said. Democrats have said the debt ceiling must be approved on a bipartisan basis — with GOP support — as it has been historically and given that the current national debt was created by spending approved by both parties.
What I find striking, once again since the debt limit issue arises into partisan affairs all too often, is the lack of awareness and concern for the business community, from the very party that always carries its water.
The business community is rightly concerned about the potential economic disaster that looms should the Congress fail to do its job by increasing the debt limit.
To underscore the resolve of the former secretaries to help force passage of the debt limit language most of them sent a letter to congressional leaders outlining the grave harm the partisan dickering over this matter will mean to the nation. Should the U.S. default on its debt or even if the partisan games continue to the 11th the impact on the economy could be “detrimental”.
Signing the letter was Michael Blumenthal, Robert Rubin, Timothy Geithner, Larry Summers, and Jacob Lew. It should be noted that Mnuchin, who served as Treasury secretary during the most unsettling term of Donald Trump, did not sign the letter.
The letter made the points Republicans need to heed.
“Even a short-lived default could threaten economic growth,” the group wrote. “It creates the risk of roiling markets, and of sapping economic confidence, and it would prevent Americans from receiving vital services. It would be very damaging to undermine trust in the full faith and credit of the United States, and this damage would be hard to repair.”
The U.S. has never defaulted. Not once. It must be clear to the Republicans in this session of Congress the damage they do to the nation, and themselves, should it happen on their watch. Giving the nation a historic financial crisis on top of the pandemic is a massive over-step, even for them.
And so it goes.