The New York Times editorial board explains how the Republican refusal to let the nation pay would make a bad situation much, much worse:
Postponing default by raising the debt ceiling for five or six weeks offers only momentary relief, and refusing to do so would have been unthinkable. Treasury Secretary Jacob Lew told the Senate Finance Committee on Thursday that the public’s retirement savings and benefits were at serious risk if Republicans left the debt ceiling unchanged. Business leaders — the traditional constituency of the Republicans until the Tea Party muscled them out of the way — have been pressuring leaders to change course. [...] Each day the shutdown continues, the lack of services grows more acute. Republicans know that they are hurting those most dependent on government assistance (who tend to be Democratic constituents). To cite just one example, many states are about to run out of federal nutrition aid to the poor. Michigan, along with other states, is close to shutting down its Women, Infant and Children feeding program, Temporary Assistance for Needy Families, school lunches, and food stamps.
House leaders are still working on the details of their debt-ceiling proposal. But even Senate Republicans have grown weary of the House’s confrontational tactics, and plan to include an end to the shutdown as part of any debt-ceiling bill that emerges from the House.
Asked whether any negotiations over the budget will take place if the government remains closed, the Senate majority leader, Harry Reid, on Thursday gave an answer that was firm and correct: “Not gonna happen.”
The Los Angeles Times:
The latest out of the extreme conservative wing of the Republican party is that a failure of the U.S. government to take the steps necessary to pay all its bills on time would be no biggie. They say we could juggle things around and avoid missing any payments on the debt, which they figure is the only thing our creditors really care about. Some, such as Sen. Rand Paul, go a step further and say failure to raise the government's borrowing limit might be a blessing: "If you don't raise the debt limit," he told the New York Times, "all you're saying is, 'We're going to be balancing the budget.'"
Um, no.
What you're saying is that the federal government is going to start picking and choosing which bills to pay. Depending on the vagaries of cash flow, maybe today the military doesn't get paid, maybe tomorrow Social Security checks don't go out, or maybe Medicare can't cover its bills. It's not a good sign of creditworthiness when a house hold starts deciding to pay the electric bill a few days late to avoid missing a mortgage payment. It's much worse when the government whose bonds form the basis of the entire global financial system starts doing that.
Paul Krugman details how a default would affect Social Security, Medicare and other critical programs:
A report last year from the Treasury Department suggested that hitting the debt ceiling would lead to a “delayed payment regime”: bills, including bills for interest due on federal debt, would be paid in the order received, as cash became available. Since the bills coming in each day would exceed cash receipts, this would mean falling further and further behind. And this could create an immediate financial crisis, because U.S. debt — heretofore considered the ultimate safe asset — would be reclassified as an asset in default, possibly forcing financial institutions to sell off their U.S. bonds and seek other forms of collateral.
That’s a scary prospect. So many people — especially, but not only, Republican-leaning economists — have suggested that the Treasury Department could instead “prioritize”: It could pay off bonds in full, so that the whole burden of the cash shortage fell on other things. And by “other things,” we largely mean Social Security, Medicare, and Medicaid, which account for the majority of federal spending other than defense and interest.
Some advocates of prioritization seem to believe that everything will be O.K. as long as we keep making our interest payments. Let me give four reasons they’re wrong.
Much more below the fold.
Jay Bookman at The Atlanta Journal Constitution:
[Y]ou can't keep the government shut down for another six weeks. It's just stupid and accomplishes nothing. It certainly isn't saving any money: It has already been decided that federal employees are going to get back pay for all the days they've missed -- the House voted 407-0 in favor of that approach earlier this week. And 10 days into the shutdown, it has already proved ineffective as a hostage to force concessions.
So why continue? Forcing federal employees -- including a lot of folks who make $40,000 or less a year -- to sit at home and try to live off their savings for another week, month or six weeks makes no sense. It accomplishes nothing and does a lot of harm to government services and to those businesses and citizens who rely on them. If we're going to pay these workers -- and we are -- let them go back to work to earn that pay.
The Boston Globe looks at the impact of the shutdown a possible default on America's foreign policy:
THE US government shutdown is an ugly sight, and the entire world is watching it. [...] The sense of uncertainty created by the US government shutdown creates a drag on the entire global economy. Governments around the world have built their economic systems around the dollar, whose status as the world’s reserve currency depends on a reputation for sober fiscal management. [...]
When Republicans refuse to fund the federal government and flirt with the idea of defaulting on debts, fear spreads among longtime allies that the United States will break its promises to them. [...]
The longer the shutdown continues, the more it will sidetrack goals that Republicans say are their top priorities: economic growth, national security, and restoring the sense of American leadership in the world.
The Nation:
In the short term, Obama and the Democrats must focus on avoiding any concessions that would allow a minority within a minority to force cuts in Social Security, Medicare and Medicaid. But the crisis has created an opening for a discussion of gerrymandering and other structural challenges to democracy. The president has spoken before about the prospect that the Constitution will have to be amended to restore the rights of citizens to control the flow of big money in politics. This is vital. Just as vital is his support for renewal of the Voting Rights Act. But now he has to speak to the American people about the role that gerrymandering plays not just in limiting competition, but in empowering extremists who reject negotiation, compromise and the public good.
The American people are frustrated with Congress and are looking for ways to address this crisis. Groups like Common Cause and FairVote, which have campaigned on behalf of democratic reform for years, are at the ready with smart proposals—from nonpartisan redistricting commissions to proportional representation to creation of multi-member districts. Obama should use his bully pulpit not just to end the immediate crisis but to call for a national dialogue about the tattered state of our democracy. And he should call for reforms to ensure that Americans will never again be forced to live from crisis to crisis.