They are losing the majority of Americans who support reasonable access to abortion. They are losing the vast majority who don’t believe we can wait until every mentally ill American is properly medicated before restricting sales of assault weapons. And now they may lose one of their more loyal groups, investors with significant portfolios. The signs are all there.
The reason, once again, is Republican game-playing over raising the debt limit. Once again, anxiety is rising in the investing class over anxiety in financial markets. Defaulting on America’s debt is unthinkable, except, it seems, when the president is a Democrat and Republicans have a House majority. Then it’s “play ball.”
Back in 2011, when Republicans pushed the full faith and credit of the United States to the cliff edge, the Dow Jones Industrial Average plunged as the debt-ceiling vote was being taken.
There should not be a vote on the debt limit. It represents spending already on the country’s credit card. You don’t call American Express and say, “Hey, I don’t want to pay for the trip to Belize that I put on the card. I didn’t like the hotel.” American Express would not be amused. If you stiffed it in any way, your credit score would take a dive, and lenders would promptly raise the interest rates they charge you.
This happened to America after the 2011 standoff. So appalled were the world’s financial markets over this threat to the country’s credit-worthiness, that Standard & Poor’s took away America’s triple-A rating for the first time. As a result, the taxpayers ended up spending at least $19 billion in higher interest costs.
Biden really shouldn’t be “negotiating” at all. That muddies the idea that America pays its bills, period. But his explanation that tax cuts, not just spending, raise national debt is useful. The giant Donald Trump tax cuts, on top of the giant George W. Bush tax cuts, severely limited revenues. Neither president, meanwhile, had a problem with spending.
The Congressional Budget Office estimated that the Trump tax cuts would cut revenues by about $1.5 trillion through this year, even after adding in the value of economic activity they created. Congress raised the debt ceiling seven times under George W. Bush and three times under Trump. It didn’t matter whether the majority was Democratic or Republican. Democrats sometimes grumbled, but no one seriously argued that the debt-ceiling wouldn’t be lifted.
As for the politics of these theatrics, the 2011 scare ride surely did not help Republicans in the next election. Barack Obama was reelected president, and Democrats gained eight seats in the House and two in the Senate.
Some conservative budget experts are trying to do Republicans a service by disabusing them of the idea that refusing to raise the debt limit would have minimal economic impact. They are being ignored.
Joe Biden is smartly courting recently elected Republican moderates, like Mike Lawler of New York, to buck the addiction to sowing budget trauma for the amusement of the MAGA crowd. His swing district in the New York suburbs is full of prosperous investors who look at their portfolios every day, if not three times a day. Shrieking freefalls in the financial markets would make them most unhappy.
The numbers: Republicans hold a House majority of only nine members, one of whom is the notorious George Santos. Biden won 18 of the districts currently held by Republicans. One can assume that many of their swing-voting constituents are most unhappy over the party’s opposition to reproductive rights. They’re sickened by its defense of lunatics’ strutting through Walmarts with weapons of war.
Add to that games played with their portfolios, and they’ll again seek sanctuary with Democrats.