Speaking of clueless Republicans in the House that teabaggers built, here's part of the new brain trust entering office today: Rep. Mick Mulvaney (R-SC).
Yesterday, newly-elected Rep. Mick Mulvaney (R-SC) appeared on Fox Business to talk about his own intention to vote against raising the debt ceiling. The host asked Muvlaney if he was willing to “risk the possibility of a default on our debt.” Mulvaney responded that he has “no difficulty in” voting against raising the debt limit and that it’s worth it to “force a discussion” about spending. The host then followed up by asking, “What do you think would happen if the debt ceiling wasn’t raised?” Mulvaney responded, “Well, I don’t know. I’ve asked that question a lot. I’ve heard Goolsbee on Sunday say it’d be catastrophic, I’ve heard others say that. I did some research last night from [the Congressional Research Service], they don’t know what that means. I think they’re guessing."
He "thinks" the experts at Congressional Research Service are "guessing" when they talk about the consequences of America defaulting on its debt and legal obligations. TP links to a 2008 CRS report [pdf] which actulaly lays it out fairly clearly.
Although not all the possible consequences of a government default are known, it would mean that the government could no longer meet all of its legal obligations. Not only the default, but the efforts to resolve it would arguably have negative repercussions on both domestic and international financial markets and economies.
Not having a crystal ball, CRS can't detail every disaster that could occur with default. But here are a few clues: "the immediate cessation of more than 40 percent of all federal government activities (excluding only interest payments on the national debt), including Social Security, military operations in Iraq and Afghanistan, homeland security, Medicare, and unemployment insurance. This would not only threaten the safety and economic security of all Americans, but also have dire impacts for the economy and job growth."
That's here at home--and in Iraq and Afghanistan (are they really forgetting about the wars?). Internationally, American default would very likely lead to panic in financial markets, because U.S. Treasury bonds hold so much investment capital, investment that would be disrupted with a default and that could potentially cause a run on outstanding Treasury bonds. (Picture the run on the Bailey Savings and Loan in It's a Wonderful Life times billions? Trillions?)
In other words, catastrophe.
The new House majority is dominated by the know-nothings who elected them. There was a lot of talk during the whole tax-cut negotiation debacle about Obama being the adult in the room. Part of being the adult in the room is knowing when to say "no" to the demands of the toddlers. This new House majority are those toddlers. They can't be negotiated with, particularly on the debt ceiling.
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