During an interview that aired on Fox News on Sunday, Chris Wallace asked Eric Cantor whether or not Congressional Republicans were willing to "let the country go into default" or "allow a government shutdown." Cantor, the presumptive House Majority Leader for the 112th Congress, didn't tell Wallace yes or no, instead implying that either development would be as much the president's fault if it happened. Last week's elections have drawn a number of comparisons to the 1994 midterms, which were, indeed, followed by a shutdown a year later. Here are the latest thoughts on whether a shutdown might be in the cards, and why.
Wallace's Question, Cantor's Response Wallace asked Cantor, "Are you willing to say right now, we're not going to let the country go into default, and we won't allow a government shutdown?" Cantor replied, "The chief executive, the president, is as responsible as any in terms of running this government. The president's got a responsibility, as much or more so than Congress, to make sure that we are continuing to function in a way that the people want."
What Would This Mean? Ian Millhiser at Think Progress explains:
A 'shutdown' occurs when Congress fails to appropriate money to fund the federal agencies. As a result, nearly every federal employee is sent home, including the officials who cut Social Security, Medicare and Medicaid checks. In other words, by threatening a shutdown, Cantor is holding the incomes of millions of American seniors hostage unless Obama complies with his petty demands ... A default could occur if the House GOP refuses to authorize the Treasury to issue new bonds in order to cover the interest on the nation's existing debt, and the results of such a default would be catastrophic. If the world's safest investment — US Treasury bonds — were essentially converted into junk bonds overnight, it would trigger a worldwide financial panic. Meanwhile, the extraordinary economic steps America would need to take in order to mitigate the possibility of a default would pull more than a trillion dollars of spending out of the world economy, potentially triggering a second Great Depression.
Who Said Anything About a Shutdown? "Cantor didn't threaten a shutdown," points out Shane Vander Hart at Caffeinated Thoughts. "He was answering a question." Vander Hart also notes that "Cantor's 'petty demands' are precisely the reason why Republicans were swept to power in the House and made huge gains in the Senate. People want fiscal sanity back and if Republicans don't deliver then they’ll likely be sent packing. People want spending cuts and the growth of government scaled back, not just arrested."ADVERTISEMENT
Republicans Wouldn't Dare Default Blogger Zandar rolls his eyes at "this particular game of chicken," pointing out that "the people that stand to lose the most here, especially from the threat of a sovereign debt default, are the investor class. They are the ones who spent billions to get the GOP into power, and the threat of default will annihilate the bond market." He concludes, "Eric Cantor is bluffing and he knows it ... The Republicans will get reined in on this one damn quick. Count on it. This is not a card Cantor and the Tea Party crazies will ever, ever be allowed to use."
Given the Economy, a Shutdown Would Be Insane "In what universe does it make sense to shut down the government when the economy is barely alive and unemployment is pushing 10 percent?" wondered Andrew Leonard at Salon, a few days before Cantor's comments. Leonard went on to list instances of financial fallout from the 1995-96 shutdown, including "local communities near national parks losing an estimated $14.2 million per day in tourism revenues" and "U.S. tourist industries and airlines sustain[ing] millions of dollars in losses."
They Should Hurry Up and Pull the Trigger Also writing days before Cantor's interview, Stan Collender argued at Capital Gains and Games that not only should Republicans move for a shutdown, they should do it before 2010 is over. "Shutting down the government in December might be the best way to seal the deal with the party base that was all but guaranteed this type of confrontation during the campaign and will still be walking around with its chest puffed out in December," Collender wrote. "By contrast, not taking advantage of the opportunity might well begin to alienate some who would see it as a betrayal."
Won't Take it Off the Table
, Think Progress
The New Bogeyman
, Caffeinated Thoughts
, Zandar Versus the Stupid
The Deathwatch Begins
Can the GOP Wait?
, Capital Gains and Games