By Jim Hoover
Most Americans are totally unaware that 60 Republican members of the House of Representatives control our economic destiny, our livelihood, perhaps for years to come, after August 2nd, 2011.
In essence, the Tea Party Caucus seems to control whether our country defaults on its debt or not.
It is composed of 60 Republican members of the House of Representatives, of the 242 making up the majority, and four members of the Senate. Though John Boehner is the Republican Speaker of the House, he seems to have little control over the madness that is the Tea Party Caucus. Both Boehner and Mitch McConnell, the Senate minority leader sought to separate raising the debt ceiling from any spending plan.
The Tea Party caucus will have none of it.
The Caucus leader is Minnesota Congresswoman Michele Bachmann, which perhaps explains part of its zaniness. It was launched and chaired by her on July 16, 2010, dedicated to promoting fiscal responsibility, adherence to the movement’s interpretation of the Constitution, and limited government.
Make no mistake about it. There is every indication, an estimated 70% certainty that the Tea Party faction will lead us to default rather than accept any revenue increase, even coming from the elimination of some tax loopholes, most enjoyed by the rich. The question is how much influence do they have after the financial mainstream has its say.
In essence, the Tea Party faction is saying that the goal of no tax increase is more important than the credit rating of the US, and more important than the health of the U.S. economy, even more important than the national interest.
Perhaps some see it as a “Chicken-Little” moment, but a global depression is not out of the question if we default on our debt. Yesterday, we even saw mild-mannered Barack Obama walk out of the debt-taxes-budget talks.
If there is not an agreement to lift the debt limit by August 2nd, we would have to cut spending, lay off government workers, the stock market would plunge, financial institutions would be in trouble as major holders of US Treasury Bonds, their liquidity in grave doubt.
Unemployment would soon shoot up to over 10% with government workers furloughed, followed by layoffs of dependent private employees. Layoffs would mount.
Many, depending on government payments, like social security, and already on the edge, would literally begin to starve without checks to buy food? Trillions in spending cuts would come.
It took Argentina nearly 8 years to recover after its 2002 default, minor compared to that of the US.
Now it is incredibly cheap for the Government to borrow, the interest rate on a 10 year bond is 2.4%. After default, cheap borrowing would end for a very long time, and it would take years for our credit rating to recover, if it ever did.
Would a Tea Party Republican majority be this stupid? One likes to think that they would not. But many are steeped in ideology and sheltered from clear thinking by their media of choice, while ignorant about economic truths.
If Americans really listened to some of the Tea Party Caucus members, they would see a complete divorce from reality: for example, Michele Bachmann’s poor grasp of history and her husband’s homophobic statements.
That is why the chance of a debt default is so great, and why Americans should begin to prepare for the worst.
