Representative Alexandria Ocasio Cortez – or AOC – doesn’t always make sense to me.
She’s often hyperbolic, partisan, or just plain wrong. But some of AOC’s recent comments on America’s looming default were coherent and accurate.
“The stakes of a default cannot be understated,” AOC said. “The chaos that would ensue and the impact on people’s everyday lives would likely be immediate and it is one of the reasons why we need to take default off the table.”
AOC continued, saying that Republicans need to “agree to raise the debt limit because, frankly, this is a very serious situation that nobody wants.”
“This is not a partisan issue,” AOC said.
Where negotiations stand
Democrats are pushing to increase the debt limit without preconditions. Meanwhile, Republicans are insisting that the debt limit be raised with a condition – the acceptance of the House-passed Limit, Save, Grow Act, which would “increase the federal borrowing limit by $1.5 trillion while also reducing spending by roughly $150 billion from this year to the next,” Fox News reported.
AOC was critical of the Republican position. “It’s reckless, it’s irresponsible. It will hurt rural communities; it will hurt urban communities. It will hurt seniors; it will hurt kids enrolling in Head Start.”
AOC isn’t the only one using such rhetoric. Across the Democratic Party, elected officials are suggesting that Republicans are holding the US “hostage” in debt ceiling negotiations.
President Biden has threatened to meet the Republican’s hardball tactics with hardball tactics of his own – namely, using the 14th Amendment, which holds the “validity of the public debt of the United States, authorized by law…shall not be questioned,” to raise the debt limit without Congress.
Can Biden do that? If he does, the move will undoubtedly be challenged in the courts, whose purview is to interpret constitutional limits.
Whatever happens, it needs to happen within the next eight days.
What happens if US defaults?
If the US fails to raise the debt limit, and defaults on their debts, the results would be disastrous and far-reaching.
“The repercussions of a first-ever default on the federal debt would quickly reverberate around the world,” PBS reported.
“Orders for Chinese factories that sell electronics to the United States could dry up. Swiss investors who own U.S. Treasurys would suffer losses. Sri Lankan companies could no longer deploy dollars as an alternative to their own dodgy currency.”
And here in America, the default would be felt profoundly. If the US default even for just one week, the economy will weaken so quickly and so severely that 1.5 million jobs would be lost. And if the default lasted longer? Say, into the summer, “U.S. economic growth would sink, 7.8 million American jobs would vanish, borrowing rates would jump, the unemployment rate would soar from the current 3.4 percent to 8 percent and a stock-market plunge would erase $10 trillion in household wealth.”
So, AOC is correct in rating a prospective default unacceptable. Is she correct in blaming Republicans for the standoff?
Well, one could argue that if raising the debt limit were so important, Democrats should just concede to Republican demands.
But Democrats are dealing with the immediate issue in a focused way – preventing a default in eight days’ time. Republicans are complicating the issue with an introduction of demands that are guised as related (avoiding future spending/debt limit violations), but are really just about leveraging majority power to exact a conservative agenda.
I understand that’s how politics work – leveraging majority power to exact one’s agenda – but the consequences of default dwarf all other agendas at the moment.
Someone needs to blink first.
Harrison Kass is the Senior Editor at 19FortyFive. An attorney, pilot, guitarist, and minor pro hockey player, Harrison joined the US Air Force as a Pilot Trainee but was medically discharged. Harrison holds a BA from Lake Forest College, a JD from the University of Oregon, and an MA from New York University. Harrison listens to Dokken.