Are House Republicans Heroes or Traitors to the U.S. Economy?

Posted in Economy • October 10, 2013

House Republicans

There has been so much name-calling, finger-pointing and blame passed around in Congress that we sometimes forget these are actually elected officials chosen to represent the people living in their districts.

With the Oct. 17 deadline looming for raising the debt ceiling and a civil war brewing between moderate Republicans and Tea Party conservatives, Congress has never been more disconnected from the general welfare of the American people — and rarely held in such low esteem.

A recent CBS poll found Americans blame House Republicans for the government shutdown more than President Barack Obama or House Democrats. In fact, Gallup places Congress’ approval rating within one point of its lowest in polling history — 11 percent.

Even so, the Republican party continues to delay passing a government spending bill until funding is stripped from President Obama’s signature Affordable Care Act.

As the government shutdown rounds into its second week and the looming debt ceiling threatens the U.S. economy, the obvious question remains unanswered: Why are House Republicans continuing along this path toward political suicide?

View from the Right: Taking A Stand Against Costly Entitlement Programs

It really comes down to the overall funk House Republicans have been stewing in since Obama successfully passed the Affordable Care Act in 2010. The bill’s detractors argue that a healthcare mandate infringes on individual freedoms, disrupts capital funding of the health insurance marketplace and doesn’t achieve a certain level of “fairness” by delaying certain parts of the bill like the employer mandate.

Essentially, Republicans are simply against paying the initial price tag attached to Obamacare and are wary of how self-sustaining it will be in the long-run.

“The Affordable Care Act is another massive entitlement. If it were to be implemented fully, the cost was estimated by the Congressional Budget Office at $1.8 trillion,” Romina Boccia, a Grover M. Hermann Fellow in Federal Budgetary Affairs for The Heritage Foundation, told GoBankingRates. ”It increases federal health care spending by 15 percent by the end of the decade, and raises the share of the healthcare market funded by the government to over 50 percent.”

There have been 17 government shutdowns since 1977, Boccia said, which the markets have largely shrugged off, especially as they’ve mostly been float-on or partial shutdowns. “The economy might slow a little bit, and workers are home making their own sandwiches, but troops are getting paid and these federal workers have usually received their back-pay whether they were furloughed or not,” Boccia said.

House Republicans Champion a More Sustainable Budget

As the Oct. 17 debt ceiling deadline looms ever closer, the government shutdown only highlights the overall budgeting problem Congress has been tasked with handling. It also places more public scrutiny on debates over programs House Republicans argue are ballooning the government deficit.

“Why do we have a debt limit? Not to continually raise it,” Boccia said. “Why do we keep reaching that debt limit and so fast? Look at what trajectory the U.S. budget is on — is this sustainable? No.”

House Speaker John Boehner told ABC’s George Stephanopoulos “now, it’s time to talk about the spending problem.”  and champion cuts as well as reforms for entitlement programs like Social Security and Medicare in order to reduce greater government debt in the future.

The three major credit-rating agencies have said that the U.S. debt profile has improved significantly in the last two years, thanks to the slow growth of the gross domestic product. House Republicans clamoring for a more balanced budget by reducing government spending argue they’re looking out for the U.S. economy in the long-run.

View from the Left: Holding the U.S. Economy Hostage

Is it fair to use the more than 400,000 furloughed federal workers as leverage for defunding an affordable healthcare initiative that passed in Congress three years ago?

Although House Republicans and Democrats voted unanimously to pass a bill approving back pay for furloughed federal employees, Senate Majority Leader Harry M. Reid said that with the measure passing there should be no reason to keep them out of work at all.

“It’s really cruel to tell workers they’ll receive back pay once the government opens and then refuse to open the government,” Reid said on the U.S. Senate floor, explaining that House Republicans have essentially authorized a “paid vacation” for furloughed workers, with the U.S. government footing the bill.

Adam Jentleson, a spokesman for Reid, said in a statement that Boehner exhibited a “consistent pattern” of disregarding the facts of the situation. “Americans across the country are suffering because Speaker Boehner refuses to come to grips with reality.”

Is it heroic to stand up for your beliefs and stick by them? Sure, if you’re fighting for the greater good of your constituents. But when it comes to the congressional tussle between a vocal conservative minority and more moderate House Republicans, the greater good might be over-shadowed by the impending economic repercussions of the government shutdown and potential default on debt payments.

USA Today currently boasts a “cost of the shutdown” clock that ticks upwards at a rate of $12.5 million an hour. More than a week in, the shutdown had racked up $2.3 billion.

Steve Jarding, a lecturer at Harvard’s Kennedy School of government and Democratic consultant, told The Washington Post that Republicans have even gone so far as to argue “against representative government” since the government shutdown began, a political notion that heralds back to 1776.

“Let’s just shut it down and eliminate it,” he said. “That line of thinking went out about the time of the Articles of Confederation.”

Possible Default Threatens U.S. Credit Rating, Interest Rates

U.S. Treasury Secretary Jack Lew issued a public warning against budget brinkmanship to members of Congress who were “playing with fire,”  imploring then to reopen the government and increase the nation’s $16.7 trillion debt limit.

Although the U.S. Treasury expects to have $30 billion of cash on hand Oct. 17, Lew said that money will quickly disappear — the government’s payments can rack up $60 billion in bills on a single day.

“A default would be unprecedented and has the potential to be catastrophic,” said the U.S. Treasury report, released Oct. 3. “Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world.”

Mark Zandi, chief economist at Moody’s Analytics, told the Associated Press that holders of U.S. Treasury bonds would demand higher interest rates if the U.S. government defaulted on its debt payments. This outcome would ultimately cost the country hundreds of billions of dollars in higher interest payments for years to come and increase the national debt — which is, of course, the source of Congressional debate.
“If they don’t pay on the debt, that would cost us for generations to come,” Zandi said.

Are House Republicans Heroes or Villains in This Economic Tale?

On the one hand, House Republicans are trying to control government spending and cut back on entitlement programs to avoid continually raising the debt ceiling. Balancing the budget and making government programs financially sustainable for future generations without having national debt overcome the GDP is an admittedly noble economic cause.

However, insisting on a government shutdown and taking hundreds of thousands of Americans out of work in an attempt to defund an affordable healthcare initiative for the public good — and that passed on every level possible — inherently seems wrong. Further, using the debt ceiling deadline as a way to hold Democrats in Congress hostage is simply preposterous.

Ultimately, Americans will wait and see if House Republicans can let go of their obsession with defunding Obamacare and focus on resolving the debt ceiling crisis at hand, an issue that will directly and negatively affect the future of the U.S. economy if the government defaults on debt payments and subsequent downgrading of credit ratings ensue.

Photo credit: Hyokano

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