“Nobody believes the United States is going to walk away from its obligations,” Speaker Boehner said of the debt ceiling negotiations in a Tuesday interview on Fox News. With no hesitation, he then strongly hinted he’s perfectly happy to force the United state to walk away from its obligations. This is why Republicans are winning the tug of war on Capitol Hill.
The August 2 deadline, set by the Tim Geithner in April, to raise the borrowing limit is just “some artificial date created by the Treasury secretary,” Boehner said. Is it? Sure, the deadline moved a few times in the beginning of the year, and Geithner has some tools at his disposal to make payments even as the Treasury begins to bump up against the ceiling. But is it arbitrary?
The Bipartisan Policy Center released a report (.pdf) on Tuesday sussing out what happens if the so-called “X date” is breached without congressional action. Forget the market turmoil. Here’s what BPC says would happen in the month of August alone: 40% – 45% of the government’s bills would have to go unpaid. The biggies — Social Security checks, Medicare and Medicaid benefits, Defense vendor bills, active duty Military pay, unemployment insurance and debt interest payments — make up enough of the outlays that many of those payments would have to get deferred.
And the “X date” itself? BPC checked Geithner’s math and said it will most likely fall somewhere between August 2 and August 9.
Of course, Boehner knows all this. He’s just way better at the whole brinkmanship thing than the Democrats. If he can convince them that he’s not only willing to let the date slip if he doesn’t get what he wants, but doesn’t even really believe anything bad would happen if it does, Democrats will shoulder all the concessions. Saying that “nobody believes the United States is going to walk away from its obligations,” is just a way to avoid spooking the markets. The government won’t walk away. The debt ceiling will be raised in time. But it’s Boehner’s job to make Democrats believe it might not.
