The Obamacare health exchanges got off to a disastrous start this month, plagued by systemic computer glitches. But the focus of the nation was fixated on a congressionally induced government shutdown and a potential default that could dwarf the Lehman Brothers collapse of 2008 and the Great Recession many of us still feel today.
By Wednesday, the magnitude of this epic congressional feint was an Associated Press/gfk Poll that showed approval for the body at 5 percent, putting Congress in the company of drug dealers and Kim Jung Un. The poll revealed 62 percent blamed Republicans. Gallup measured support for the Republican Party at a historic low 28 percent, compared to a slightly less miserable 43 percent for Democrats.
Capitol Hill sources tell me that among the eight Hoosier Republicans in the House, a handful actually entertained a federal default.
When I sought positions from the Republican delegation, U.S. Rep. Todd Young came out emphatically against a default, while Reps. Marlin Stutzman, Susan Brooks, Larry Bucshon and Luke Messer took positions theoretically against a default, but couched the situation by urging President Barack Obama and congressional Democrats to come to the table to negotiate.
Missing in response was Rep. Todd Rokita, who in 2011 was open to a default.
Young, the Bloomington Republican who sits on the House Ways & Means Committee, has been speaking out against a federal default since 2011 and indicated he opposes anything that would prevent raising the debt ceiling, which is set to expire Oct. 17. But the closer that day comes, the more risk there is to a credit downgrade. In 2011, that downgrade actually came before the debt limit deadline.
Addressing the House on May 9, Young pushed the Full Faith & Credit Act, which he said “Would make default impossible.” He acknowledged this is the third time since he joined the House in January 2011 he has faced a debt ceiling showdown.
“We have an opportunity to work together and finally tackle long-term issues such as tax reform,” Young said in May. “Let’s take default off the table and work on real issues.”
Speaker John Boehner has shifted on the issue publicly. “What the president said today was if there’s unconditional surrender by Republicans, he’ll sit down and talk,” Boehner said after Obama’s Tuesday press concurrence. But Capitol Hill sources have told me, “Every time Boehner speaks to the conference, he says we’re not going into default.” On Thursday, the Associated Press reported Boehner would seek a short-term debt ceiling increase.
U.S. Sen. Dan Coats was critical of Obama’s unwillingness to come to the table. “Refusing to negotiate on a plan to address our nation’s $17 trillion debt would be a complete failure of this administration and a disservice to the American people,” Coats said. “Congress and the administration cannot continue to ignore our nation’s debt crisis and avoid the difficult decisions that would result in restoring economic growth, I urge the president to stop dodging and start leading on this critical issue so we can enact a plan to pay our past bills and bring down our massive debt.”
Stutzman, who gained notoriety this month when he told the Washington Examiner that his wing of the party didn’t want to be “disrespected” but had no clue to an end game in this standoff, said on Tuesday, “Because Washington’s spending addiction has put this country $17 trillion in debt, any debt ceiling conversations must include a serious, long-term strategy to reduce our national debt. Given the harm a default would have on families, businesses and financial markets, Washington must avoid default and tackle the issue of deficit spending.”
Reps. Bucshon, Walorski, Messer and Susan Brooks also lined up against a default, but blasted Obama and Democrats for not negotiating.
On Tuesday, Obama reiterated he would not “negotiate” under the threat of a default, which he described as “insane” and “irresponsible.”
Throughout the week, there was speculation in some GOP quarters that a default wouldn't really be that bad.
Howard County Republican Chairman Craig Dunn, who works in insurance and financial services, wrote in his column for Howey Politics Indiana of a default, "Money Markets may become grossly disrupted. We saw this situation in September of 2008 when Lehman brothers collapsed. There is a very complex and sophisticated system of securities purchase and settlement that is supremely dependent on trust and confidence between the parties to a transaction. A breakdown of that confidence could dry up credit and virtually freeze our economy. This alone could move us from recession to depression overnight. We saved ourselves last time. Could we be lucky again?"
Dunn added, "It is time for our president to show some leadership and Congress to work on a compromise so that we not run up to the edge of the cliff and stare into the abyss.”
On the wall in his Kokomo office is an 1864 Confederate States of America Treasury Bond. “It was to pay 6 percent interest for 30 years,” said Dunn, who has written two books on Indiana’s Civil War legacy. “It has one coupon that has been clipped."
"It was guaranteed by the Full Faith and Credit of the Confederacy," Dunn added. "Enough said.”