A lesson in the dangers of extremist, scorched-earth politics from U.S. Republicans

OTTAWA—Partly a racist backlash against former American president Barack Obama and partly a revolt against homeowner bailouts by the federal government during the 2008-09 financial meltdown, the Tea Party came to prominence with significant Republican wins in United States Congressional elections in 2010. Within nine months, the revolt embodied by Tea Party legislators took shape in an attack on Obama’s spending programs backed by the threat to wreck America’s financial credibility. Led by Tea Party hardliners, the Republicans created a showdown over raising the federal government’s debt ceiling, something that had been done many times by Congress without incident in previous decades. The standoff, which had the potential to badly damage the U.S. economy, was finally settled 72 hours before the government would have defaulted on its debts. It was a victory for the far-right Republican faction, which extracted some US$900-billion in promised spending cuts by the Democrats as the price for allowing the debt ceiling to be increased. Twelve years later, the Tea Party has faded but the burn-the-boats determination to deconstruct the U.S. government thrives in the right flank of the Republican Congressional caucus, now all the more uncompromising under the angry, no-holds-barred influence of Donald Trump. This year, the Republicans again forced a confrontation over expanding the U.S.’s $31-trillion debt ceiling. With a default on U.S. debt looming next week, President Joe Biden and Republican House Speaker Kevin McCarthy reached a deal on May 28 to raise the limit as part of a package blocking most increases in government spending for two years. In what some see as a cruel and heartless campaign, the Republicans also succeeded in their aim to impose work requirements on some Americans receiving food stamp aid. The agreement shifted the drama to a test of the ability of Congressional leaders to get the measure passed before the June 5 default deadline set by Treasury Secretary Janet Yellen. However, it turns out the replay of Republican brinkmanship is a lesson for all in the risks and dangers inherent in unwavering absolutism in democratic political systems built on the concept of compromise in the larger public interest. Plunging the U.S. into a debt failure would be a catastrophe for the economy, which is already weakened from the Federal Reserve’s hiking of interest rates to fight post-COVID inflation. It would mean a suspension in payments for government contractors, federal workers, those on Social Security, and others. The White House predicted a lengthy default would result in the loss of eight million jobs, prompt a 45 per cent downward spiral in the stock market, and possibly touch off a severe recession. On a wider scale, a default of this kind for the first time would reinforce global views of the U.S. as dysfunctional. And it would by all accounts reverberate internationally, creating turmoil of unpredictable proportions in a global financial system buttressed by confidence in U.S. assets. A deep slump in the world economy would be likely, economists say. All this has to be seen more than anything else as an attempt by the right to harass and undermine the Democrats, since the Republicans’ anti-deficit rhetoric only carries weight when they are out of power. During Trump’s presidency, tax cuts and lack of spending restraint caused the U.S. national debt to climb by nearly US$7.8-trillion—the third biggest increase, relative to the size of the economy, ever seen there. As a political matter of interest here, the context in which the Republicans are pushing the default confrontation is one in which about half of Americans think the federal government is spending too much money. While most Americans favour raising the debt ceiling, 60 per cent say Congress should only raise it if federal programs are cut at the same time, according to a recent CNN poll that echoed the findings of other public opinion surveys. A similar perception—that the Trudeau government is spending too much and in doing so has unleashed the runaway inflation that is punishing average Canadians—is the main message being promoted by Conservative Leader Pierre Poilievre. He promises to slash taxes, hold down spending, and reduce the federal deficit if his party takes power. As part of his plan to shake up government institutions and regulators, he wants to “remove government gatekeepers” to speed up housing construction, and fire Bank of Canada Governor Tiff Macklem, whom Poilievre accuses of exceeding the Bank’s mandate by injecting significant stimulus into the economy during the pandemic. While nothing in Canada is on a par with the debt ceiling clash in the U.S., voters here should think twice about endorsing a political party feeding on unfocused populist outrage and an avowed commitment to reckless, extremist solutions to the complex business of governing a modern democracy. Les Whittington is a regular columnist for The Hill Times. The Hill Times