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Go Home Lindsey Graham Joins the Loonies

JONATHAN COHN JANUARY 2, 2011

Lindsey Graham Joins the Loonies

The U.S. appears to be the only country in the developed world that forbids its government from accumulating debt without authorizing legislation. And that’s led to some scary moments, including one that the economist Henry Aaron shared with me recently.

During the early years of the Kennedy Administration, Congress passed an increase in the debt ceiling at the last minute. But when JFK went to sign the bill, according to Aaron, nobody could find the document. Treasury Secretary Douglas Dillon wanted to know what would happen if the government reached its debt ceiling and an administration lawyer, after some brief research, reported that “it seems, Mr. Secretary, that you are personally liable for interest on the debt.” Dillon, who was an investment banker, pressed the lawyer: How much would that be? “About $150 million a day,” the lawyer reportedly said, prompting Dillon to deadpan “I can’t last more than three days.”

It's a funny story because it had a happy ending: Kennedy’s advisors eventually found the bill. And if they hadn’t, they would have gotten together with Congress and found some other way to raise the debt ceiling. That’s because, relatively speaking, they were grown-ups who took governing seriously.

Fifty years later, can we say the same thing? Sometime in the next few months, the U.S. will reach its debt limit and Congress will, once again, have a choice: Raise the limit or let the U.S. default on its obligations. For a while now, Tea Party Republicans like Senator Mike Lee, who unseated the insufficiently conservative Robert Bennett in Utah, have been threatening to vote against the debt ceiling increase unless they win substantial reductions in government spending. Idle threats about refusing to raise the debt ceiling are nothing new, but the Tea Party crowd seems quite serious about it--in part because they've promised their base they're going to do it.

And now it looks like they have company. On Sunday's "Meet the Press," Republican Senator Lindsey Graham announced that he, too, was willing to engage in serious brinkmanship over the debt:

I will not vote for the debt ceiling increase until I see a plan in place that will deal with our long-term debt obligations, starting with Social Security, a real bipartisan effort to make sure that Social Security stays solvent, adjusting the age, looking at means tests for benefits. On the spending side, I'm not going to vote for debt ceiling increase unless we go back to 2008 spending levels, cutting discretionary spending.

As many others have noted, the demand of going back to 2008 spending levels is radical and, not coincidentally, highly unrealistic: According to the Center on Budget and Policy Priorities, it’d amount to a one-fifth cut in discretionary spending--forcing cuts that could damage the fragile recovery and starve programs like Pell Grants that most Americans value. 

And the alternative—failing to increase the debt ceiling? What precise effects would that have? This isn't my area of expertise, but my colleague Alex Hart knows a thing or two about it. Here's what he wrote last week:

Recent history provides a sense of just how scary this would be. “The reason the markets calmed down [during the financial crisis] is that we took [the banks’] toxic assets and handed the financial institutions Treasurys,” says Kevin Hassett, a scholar at the American Enterprise Institute. “If we’re in a default situation, the Treasurys themselves are the toxic assets, and it’s not clear what we can hand anybody to calm them down.”

The sad thing is, Graham seems to grasp this: In the same interview, he notes that default could be catastrophic. But that's not stopping him from making his demands. And that's particularly disheartening, since he is supposed to be one of the more reasonable members of the Republican Senate caucus. 

I suppose none of this should come as a surprise. Bruce Bartlett has been warning about this situation for months. But Bartlett is also a conservative who thinks and talk about governing seriously. And that makes him a pretty rare breed these days.

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27 comments

Of course - this is a perfect opportunity for them to destroy the economic recovery so they can regain power. Since when do Republicans care about anything else? I hope Obama Co. wasn't silly enough to not see this coming a long time ago and plan accordingly, in terms of PR. My hopes are low. A good friend (Cookie from these very pages) reminded me last night of a terrific line by novelist/poet Mary Karr quoting her Texan grandmother: "A Republican can't enjoy his steak unless he knows someone else is starving."

- WandreyCer

January 3, 2011 at 8:31am

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Well, this situation happens very rarely -- that a group of people who seem to believe their own propaganda get into power, and make threats based on that propaganda. The results could be very educational, like when the Republicans shut down Government in 1995. But Obama MUST hold the line. In the short term, the situation the Republicans put us in could be very risky and scary. But if he holds the line, the results can come out well. If he folds to lunatic Tea-Party Republican demands, the economy will reflect his failure.

- AllanL5

January 3, 2011 at 8:32am

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Well AllanL5, I agree of course - but he has a losing hand. We must raise the debt ceiling now or else? How does that win in this environment?

- WandreyCer

January 3, 2011 at 8:45am

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"[Graham] is supposed to be one of the more reasonable members of the Republican Senate caucus." Supposed to be? According to whom? Someone who has no prior knowledge of Graham's career in the House or Senate and who judges "reasonableness" on the basis of how closely a senator's haircut resembles the nice man on the local evening news? The man has always tried to pose as a reasonable moderate, but his method for doing so has been to follow the whims of his party's extremes and then take one step back toward the middle. So he was for impeachment, but he let us all know he felt bad about it. Most often, he makes rhetorical feints in the newsmedia in favor of whatever the bipartisan issue of the day is, but in the end finds excuses to vote against whatever actual legislation comes to the floor. And so on, right up to now when he announces he'll support the most extreme of the teabagger demands, but with kabuki tears about how he sure hopes nothing bad comes of it. His behavior is as predictable as clockwork, and it is governed entirely by the most extreme voices in his party. As such, there's never been anything "reasonable" about Lindsay Graham. He seems to be a legitimately nice guy, but "nice guy" ≠ "reasonable legislator." Lots of nice guys are ideological loons, and plenty of reasonable legislators are intolerable jerks. Mistaking the one for the other is at the heart of the Broderian fallacy that has all but destroyed the American newsmedia's ability to make useful judgments about the conduct of our government.

- rhubarbs

January 3, 2011 at 8:47am

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I would have thought means testing was a progressive thing to do, as long as the ceiling is high enough. Really can't understand why Obama didn't see this off early and insist this was a part of the tax deal? Especially, as we are to understand, since it's infinitely more important than anything in that package and it also threatens the global recovery. The seemingly great deal that Obama secured gets worse by the day.

- IggyPop

January 3, 2011 at 9:44am

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Acting looney is nothing new to Republicans. How can anyone forget Gingrich effectively shutting the government down because he thought that Clinton dissed him when someone asked him to exit Air Force One from the rear door. Also, Boehner and Cantor voted against important economic legislation because, they said, Nancy Pelosi dissed them. In the face of this loonyism, one has to wonder how they gained so much power.

- tennisguy

January 3, 2011 at 11:23am

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Iggy: You are correct that means testing is progressive and, in a rational world, would be desireable from a liberal perspective. However, that is only true in the short run. One of the reasons Social Security is not means tested is that means testing would taint Social Security with the stain of a "welfare program" and undermine long-term support for Social Security. That is the Republican end game for destroying Social Security. In a rational political system, I would not be particularly concerned about irrational long term strategies, but we do not live in such a system.

- spd1955

January 3, 2011 at 11:29am

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A few months ago Republicans were campaigning on the horrors of debt and demanding a reduction in the deficit. A few weeks after that they were demanding that Congress increase the deficit by extending the Bush tax cuts. A few weeks after that they are back in "horrors of the deficit" mode. The GOP doesn't fear deficits; it creates deficits. How else would they beat on social programs? My prediction is that Republicans will raise the debt ceiling as soon they've extracted all the political mileage out of the issue that they can. In addition, at some point they will discover that the care and feeding of their overlords, the top 1%-ers, will require it. Those folks own a lot of Treasuries.

- stevedwight

January 3, 2011 at 11:33am

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Ah, that's beautiful -- "The GOP doesn't fear deficits, it CREATES deficits. How else would they beat on social programs?" Very nice, concise, and accurate summation of Republican actions since Reagan.

- AllanL5

January 3, 2011 at 12:35pm

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"A Republican can't enjoy his steak unless he knows someone else is starving." Here's how I understand American politics: The right will sacrifice any other principle to make certain that no one anywhere gets something at government expense that they didn't "earn" or inherit; the left is terrified that someone somewhere won't get something they "deserve," damn the expense of providing it; and the sensible middle is too damned apathetic to marginalize the nuts on either wing.

- IowaBeauty

January 3, 2011 at 1:43pm

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Let's see what sort of stones Obama has. There is no law that describes or constrains what the president should do when appropriations exceed revenues. He can furlough the parts of government nearest and dearest to Republicans and their constituents first as the lease necessary. Then he can print dollars. That will scare the crap out of the biggest debtholders who are overwhelmingly Republican. If there are no appropriations the government shuts down. He breaks the law and prints money to keep prisoners in prison, the law enforced, and the army in the field and let's the rest of the government shut down because the Congress has authorized no payment while castigating the government. The Dems sit in the House waiting to authorize emergency funding at current levels any moment that enough Republicans shoe up to form a majority. A reverse filibuster. The sleep on cots while waiting for the Repblicans. Reid says they will approve whatever bill the House Dems will vote for. Then wait. The Republican party will implode. Constituents all over the country will hunt them in the streets.

- roidubouloi

January 3, 2011 at 1:59pm

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Meant to say castigating the Republicans. And it was incredibly stupid not to address the debt ceiling in the tax deal.

- roidubouloi

January 3, 2011 at 2:05pm

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To second roid's idea: why not make a list of government offices or functions in order, beginning with those most likely to enrage Republicans (or their paymasters) and /or engage the American public, then start to shut them down in the month before we hit the debt ceiling if it isn't raised? One or two agencies or functions a day, announced from the Oval Office? I'd start with that section of the Department of the Interior that grants leases for drilling offshore oil. Then it's on to the Small Business Administration. To get the public's attention, shut down the Post Office, then suspend the FAA. Make the favored targets of the right--Social Security and Medicare--last in line. Then see who blinks first.

- timteeter

January 3, 2011 at 2:14pm

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All of this is so unbelievably tired. This is all the Republicans have? THIS? I cannot believe Issa's lame phony-pissed visage glowering from every newspaper and this whole kabuki about the debt even flies with the American public anymore. It's like a stale re-run, Rocky 42. I want to throw tomatoes at the screen.

- WandreyCer

January 3, 2011 at 2:53pm

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This commentary here used to be fairly educated. It is getting dumber and more KOS every day. Stop whining and start thinking. Double for you, Cohn.

- ds111

January 3, 2011 at 3:03pm

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ok, ok, "The commentary..."

- ds111

January 3, 2011 at 3:04pm

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Sorry ds111 but I don't think the commentary is either stupid or uneducated. Reading Republican commentary - outright threats combined with the worst sort of propaganda - it's hard not to feel that we're on the verge of a kind of civil war. The powerful, the wealthy and the corporate have been gradually attacking the so-called middle class, ie workers and of course the poor since Reagan. It happened gradually enough that people were asleep - although the S & L and silver disasters and two recessions should have been a wake-up call - along with raging wars in the Middle East/Central Asia - but the time was uber-materialistic and full of nationalistic propaganda and maybe a majority of Americans didn't notice what was going on - But - those of us who were awake were alarmed and also, people close enough to the bottom of the economic pile definitely noticed that it was getting harder and harder just to stay even - I mean even affording an apartment in a modest neighborhood required me to work extra jobs - neither an artist's work nor a secretary's salary alone were sufficient - now, people are facing old age with its associated challenges with even less and with far less ability to cope and in an economy that has little elasticity. Young and old alike are struggling, don't kid yourselves. People are living at home with their parents well into their thirties - mid-twenties isn't at all unusual - G*d alone knows what will happen to people nearing retirement age - or older, "less desirable" workers who've lost their jobs, retired people who need extra income - and any attempt to help people is immediately attacked by the rich and powerful and their captive politicians - aided and abetted by 24/7 malicious propaganda. We're at the point now where so few have so much power, and the propaganda is so naked and so blatantly full of hate and lies - the mind simply boggles. Case in point: Michelle Bachmann. How does this person get into Congress? What's up with Issa? The threats against Obama - who in any case is practically a Republican himself? How does Palin wind up on a Presidential ticket? Seriously. Somebody please explain this to me. The threat against America is serious and real. By "America" I mean our people, our resources, economy, jobs and industries and our civil institutions. The fact is, poor workers suit corporate profitability. Offshoring jobs increasing the profits of multinational corporations. There's no incentive whatsoever to create good paying jobs, is there. Rather a poor, powerless worker pool is the happy hunting ground isn't it. Sadly, NYT reports that public workers are bearing the brunt of peoples' rage against the failing economy and growing insolvency on the state level. Well, folks, it isn't the fault of teachers and policemen and firefighters or bureaucrats is it. I'm actually beginning to get frightened.

- Sophia

January 3, 2011 at 3:27pm

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Here here Sophia - what exactly do you want in the face of overt ignorance and lies ds111? Charts and data? Bloodless recitation of facts? Worked great for Obama right? Facts don't matter to these people. I think we've all agreed that Dems lose on messaging and I hope that's what you find wanting, if so - I totally agree. But the post and the posters have been on the mark and mostly pretty meaty on substance. If your issue is that you think the Republicans have a leg to stand on, no one can help you out there buddy.

- WandreyCer

January 3, 2011 at 3:48pm

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Exactly, timteeter. Bit I really also think the drama of a reverse filibuster is a great idea, sleeping in the Capitol, waiting for enough Republicans to show up to vote emergency extensions.

- roidubouloi

January 3, 2011 at 3:49pm

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"it was incredibly stupid not to address the debt ceiling in the tax deal". Amen. And most Progressives knew it at the time. You-all really still think BHO picked the Repubs pockets with that deal?? "Stop whining and start thinking". Do you really think after 2 years of consistently weak advocacy of incoherent-semi Keynesian economic policies that BHO and 5-10 Senate DINOs are suddely going to really change?? Good luck with that. The state of the economy will largely determine the winner of the 2012 Presidential contest. The economy plus the popularity of the party nominee will influence many the House and Senate contests. Unfortunately, the incoherent barely-Keynesian economic policies (stimulus bill, bush tax package)and many bipartisan compromises to come of BHO stand a good chance by 1/12 of keeping us at best at 9-10% unemployment (actually 17-18%, if measured by criteria used for Hoover in '32) with little improvement if any by 11/ 2012 according to Keynesian analyses. Furthermore, BHO's Afghanistan policies in the Groucho Marx meme (Hello: I must be going) don't seem to be an exception to the rule that no foreign power going back three millennia has successfully occupied the place. The result is that BHO by 1/12 stands a significantly greater-than-zero chance of looking like the Dems nightmare-combo-candidate of Hoover and LBJ (or Carter, if you prefer). Even if BHO were re-elected, he sure won't alter the dynamics of House/Senate races. The resulting four-year (2012-2016) disaster with a Repub House and Senate would get blamed on Dems and destroy any possibility of Progressive policies for a generation. Many Dems see these problems. Most all shy away from any solution except to say to Progressives: Sit down, shut up, and allow BHO to propose to take us 50% further into our economic swamp because the Repubs want to take us 100% further. And be happy with his compromise to take us 75% further. More and more Progressives I know in red or blue states are saying "No Thanks" and doubt that BHO can be forcibly partisan and a strong leader. Given that such change in BHO is extremly unlikely, BHO and 5-10 Senate DINOs need Progressive challengers asap. What good did it do the Repubs in '32 to rerun Hoover or the Dems Carter in 80?? Or for HHH to wait too long to distance himself from LBJ's Vietnam policies?? [RFK would probably have beaten RMN, as would have HHH if he had distanced himself sooner from LBJ’s Vietnam policies.] Hoover, LBJ, Carter (or Chamberlain in Britain) were all good men, meant well, but had inappropriate personalities and policies for the crises they faced. The Dems should listen to Santayana about learning the lessons of History and hope a challenger can do well in some early 2012 primaries (who would have predicted McCarthy’s or RFK's level of support in 1966??) to give Dems some hope of actually benefitting from a difficult win in 2012.

- drofnats1

January 3, 2011 at 3:49pm

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Obama will not "hold the line." We may very likely see the wholesale repeal of health care. I promise you that Republicans are going to hold the line on that demand and say "we can't raise the debt ceiling because this bill is too expensive!" Watch it happen. The health bill, Democrats most amazing contribution these past two years, will be cut piece by piece. Maybe even wholesale. Then Obama is going to look REEALLLLY bad and we will be stuck with Ayn Randism ultimate test for the next decade at least! Hopefully Obama can win in the court of public opinion and people move massively against Republicans, forcing them down. But it sure doesn't look like that's going to happen.

- RedState

January 3, 2011 at 6:08pm

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Agree with RedState. The really sad fact is the only alternative to not holding the line and not passing a bill increasing the debt limit is to balance the budget on the backs of the poor and the weak and the old.

- rarmstr1

January 3, 2011 at 7:19pm

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Sophia: "How does Palin wind up on a Presidential ticket? "Seriously. Somebody please explain this to me." That one I can explain. With people unhappy with the economy and tired of Bush, it was going to be hard for just about any Republican to beat any Democrat in the presidential race. If McCain had gone with an "establishment" candidate, he would almost certainly have lost. So cCain's only shot was to roll the dice and hope that a nontraditional V.P. candidate might turn things around. (It's essentially the same strategy used by Jack Conway in the KT senate race; he had spent months throwing issues at Ron Paul and still trailed by a consistent 3 or 4 points, so his only hope was to throw the long ball with the Aqua-Buddha ad. Sure, it had a low chance of success, but he was going to lose anyway if he did nothing.) The problem with Palin is that I don't think anyone saw how wildly popular she would be with certain conservative elements. She didn't shift the ground for the general election, but she did galvanize part of the Republican party, and that fact-free influence has radicalized it made it harder to find any cooperation on many issues.

- dsimon

January 3, 2011 at 9:25pm

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The threat to shut down the government and default on our obligations is an empty threat and Obama surely knows that. The threat alone is a great Boon to Obama and it is not an accident that his approval rating has just hit 50 percent. People are beginning to get a good whiff of the new crazy and they don't like it. Keep in mind that a very small slice of the electorate participated in the recent election.

- paskunac

January 4, 2011 at 7:34am

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America is a democracy. And in a democracy if the people want to destroy their nation state they can do so. The nation state belongs to them. A writer commenting upon the German people about World War II surmised that one of the positive effects of their defeat is that they learned that they were responsible for the outcome of their going to the polls and electing a government. Like the German government in 1941, the 2011 Republicans in general; and “Tea Party” Republicans in particular; “do not intend to avoid devastation” (Hitler, Nazi Germany 1941). The greater national calamity that the Republicans will bring down upon the US by causing the United States to default upon its sovereign debt is exactly what they wish to accomplish. The American people have elected to ignore the consequences of their election(s), and their failure to do their homework. They have sewn the wind; it is just that they should reap the whirlwind.

- 12alainu

January 4, 2011 at 12:46pm

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Oh great, 12alainu, so we should endure a calamity such as that which befell the German people in order to "learn a lesson?" Spare us.

- Sophia

January 4, 2011 at 8:25pm

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By the way I would argue that American is emphatically NOT a democracy. The electoral college in and of itself precludes that. The American people did not elect G. W. Bush in 2000. We elected Al Gore. The Supreme Court took it upon itself to override the Florida courts and the electoral college, which votes land and slaves (yeah it's obsolete) and not people's actual votes, became the deciding voice. And, that same overreaching right wing court, in Citizen's United, has handed corporations the power that should be vested in the people.

- Sophia

January 4, 2011 at 8:28pm

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