GOP Madness 
 
 They’re threatening an economic shutdown that will cause financial hardship and even ruin for millions of Americans. So let’s call these House Republicans what they are, says Jon Favreau. 
 
 The most terrifying speech I ever wrote for President Obama was one he never gave. On July 30, 2011, I began drafting an address to the nation about what would happen if Congress refused to raise the debt limit within 48 hours, thus denying the United States Treasury the ability to pay our country’s bills for the first time in 235 years. 
 
 Suddenly, all of the administration’s warnings from the prior few weeks became real. Without enough cash on hand, the government would be forced to delay indefinitely Social Security checks, the ones our grandparents depend on to put food in their mouths and a roof over their heads. Veterans who served this country would stop receiving the benefits they earned, and the men and women in uniform risking their lives for us wouldn’t get paychecks. 
 
 Every company in America that does business with the federal government, of which there are hundreds of thousands, would not see their contracts paid on schedule, an effect that would ripple down to their employees and their families. With each passing day, making our debt payments to businesses and governments around the world would become more and more difficult. When the world stopped seeing the United States as a safe and reliable place to invest, the cost of borrowing money would skyrocket for every single American—whether it’s a home mortgage or a personal credit card. And those high borrowing costs, coupled with billions in delayed income for seniors, soldiers, small-business owners, and their employees, almost surely would send our economy and the world’s into a crisis even deeper and more dramatic than the Great Recession of 2009. 
 
 Fortunately, the draft speech never left my computer screen. The next day, at the last possible moment, the House of Representatives voted to provide the Treasury with the ability to pay our bills. But their decision to negotiate at the brink, under a dark cloud of uncertainty, still led to real economic damage: the stock market had the worst single day since the 2008 financial crisis, plunging 635 points. Billions in higher borrowing costs were added to the national debt. Economic growth slowed. Job growth slowed. And for the very first time, the United States lost its triple-A credit rating. 
 
 The obvious lesson from this entirely self-inflicted fiasco is never, ever to treat America’s bill-paying authority as a bargaining chip in political negotiations. The president has learned this lesson. House Republicans have not. And so, incredibly—insanely—we find ourselves a few weeks away from the same self-inflicted fiasco just two years later. 
 
 Why? 
 
 Part of the reason, I think, has to do with the dull and confusing language we use to talk about this issue. Who the hell knows what raising the debt limit really means, anyway? While not in any way true, a higher debt ceiling sounds like a green light to pile up more debt. It suggests the authority to engage in more spending and borrowing. So when a pollster asks people whether raising the debt limit should accompany a negotiation over more spending cuts, of course they’ll say yes! If the pollster adds “even if it risks default,” many people will still say yes, because what the hell does “default” mean? It may sound vaguely threatening, but certainly not as frightening as the scenario I described in the draft 2011 speech. 
 
 Contrast all that confusion with the phrase “government shutdown.” People generally know what a government shutdown looks like. We have historical context, as it’s happened before. We can visualize closed buildings and offices; services halted and benefits withheld. And by a healthy majority, the American people do not support the House Republicans’ latest attempt to put us through a government shutdown just so they can deny affordable health insurance to the sick and poor for one more year. 
 
 Well, a failure to raise the debt limit would inflict far more pain on far more people than a government shutdown. Breaching the debt limit would trigger an economic shutdown of epic proportions. The president used that phrase, “economic shutdown,” in a speech last week. He should keep using it. The White House should say it every day, as should everyone who wants to avoid such a calamity. Because it happens to be true. 
 
 A vote to raise the debt limit will not cost taxpayers a single dime. A vote to raise the debt limit will not grow our deficit by a single dime. A vote to raise the debt limit will not give the president or Congress the ability to spend any new money whatsoever. These are incontrovertible facts. A failure to raise the debt limit, however, will lead to an economic shutdown that will cause financial hardship and even ruin for millions of Americans. This, too, is an incontrovertible fact. 
 
 Republicans are still whining about Dan Pfeiffer’s analogy that compared their list of debt-ceiling demands to someone negotiating with a bomb strapped to their chest. Perhaps they prefer Mitch McConnell’s 2011 declaration that the global economy is a “hostage that’s worth ransoming.” Either way, the Republicans should help us more aptly describe a situation where they demand we accept their ideological agenda in exchange for not wreaking havoc on our lives. 
 
 “The president must negotiate!” Really? Because in most negotiations, both sides stand to gain something. In this negotiation, the House Republicans get to pass policies on which Mitt Romney ran and lost, while the president gets to live in a country that isn’t suffering from yet another economic calamity, a country that isn’t seen as the world’s superpower turned deadbeat nation. How wonderful for him. What a shining example of bipartisan cooperation to be celebrated by the Washington media. 
 
 What a joke. 
 
 From budgets and taxes to Syria and Iran, this president has shown that he will negotiate on almost any issue, with anyone, at any time. But he will not—he cannot—negotiate with a roving band of anarchists who say, “Build our oil pipeline or the troops don’t get paid. Give us tax cuts for the rich or seniors don’t get their Social Security checks. Let insurance companies do as they please or the economy gets it.” ||||| This may be the way the world ends — not with a bang but with a temper tantrum. 
 
 O.K., a temporary government shutdown — which became almost inevitable after Sunday’s House vote to provide government funding only on unacceptable conditions — wouldn’t be the end of the world. But a U.S. government default, which will happen unless Congress raises the debt ceiling soon, might cause financial catastrophe. Unfortunately, many Republicans either don’t understand this or don’t care. 
 
 Let’s talk first about the economics. 
 
 After the government shutdowns of 1995 and 1996 many observers concluded that such events, while clearly bad, aren’t catastrophes: essential services continue, and the result is a major nuisance but no lasting harm. That’s still partly true, but it’s important to note that the Clinton-era shutdowns took place against the background of a booming economy. Today we have a weak economy, with falling government spending one main cause of that weakness. A shutdown would amount to a further economic hit, which could become a big deal if the shutdown went on for a long time. 
 
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 Still, a government shutdown looks benign compared with the possibility that Congress might refuse to raise the debt ceiling. 
 
 First of all, hitting the ceiling would force a huge, immediate spending cut, almost surely pushing America back into recession. Beyond that, failure to raise the ceiling would mean missed payments on existing U.S. government debt. And that might have terrifying consequences. 
 
 Why? Financial markets have long treated U.S. bonds as the ultimate safe asset; the assumption that America will always honor its debts is the bedrock on which the world financial system rests. In particular, Treasury bills — short-term U.S. bonds — are what investors demand when they want absolutely solid collateral against loans. Treasury bills are so essential for this role that in times of severe stress they sometimes pay slightly negative interest rates — that is, they’re treated as being better than cash. 
 
 Now suppose it became clear that U.S. bonds weren’t safe, that America couldn’t be counted on to honor its debts after all. Suddenly, the whole system would be disrupted. Maybe, if we were lucky, financial institutions would quickly cobble together alternative arrangements. But it looks quite possible that default would create a huge financial crisis, dwarfing the crisis set off by the failure of Lehman Brothers five years ago. 
 
 No sane political system would run this kind of risk. But we don’t have a sane political system; we have a system in which a substantial number of Republicans believe that they can force President Obama to cancel health reform by threatening a government shutdown, a debt default, or both, and in which Republican leaders who know better are afraid to level with the party’s delusional wing. For they are delusional, about both the economics and the politics. 
 
 On the economics: Republican radicals generally reject the scientific consensus on climate change; many of them reject the theory of evolution, too. So why expect them to believe expert warnings about the dangers of default? Sure enough, they don’t: the G.O.P. caucus contains a significant number of “default deniers,” who simply dismiss warnings about the dangers of failing to honor our debts. 
 
 Meanwhile, on the politics, reasonable people know that Mr. Obama can’t and won’t let himself be blackmailed in this way, and not just because health reform is his key policy legacy. After all, once he starts making concessions to people who threaten to blow up the world economy unless they get what they want, he might as well tear up the Constitution. But Republican radicals — and even some leaders — still insist that Mr. Obama will cave in to their demands. 
 
 So how does this end? The votes to fund the government and raise the debt ceiling are there, and always have been: every Democrat in the House would vote for the necessary measures, and so would enough Republicans. The problem is that G.O.P. leaders, fearing the wrath of the radicals, haven’t been willing to allow such votes. What would change their minds? 
 
 Ironically, considering who got us into our economic mess, the most plausible answer is that Wall Street will come to the rescue — that the big money will tell Republican leaders that they have to put an end to the nonsense. 
 
 But what if even the plutocrats lack the power to rein in the radicals? In that case, Mr. Obama will either let default happen or find some way of defying the blackmailers, trading a financial crisis for a constitutional crisis. 
 
 This all sounds crazy, because it is. But the craziness, ultimately, resides not in the situation but in the minds of our politicians and the people who vote for them. Default is not in our stars, but in ourselves.
– In 2011, White House speechwriter Jon Favreau penned some ominous words predicting the disastrous effects of a failure to raise the debt limit, including indefinite delays on Social Security checks and halted troop pay and veterans' benefits. President Obama never had to give the speech, because the debt ceiling was raised "at the last possible moment," Favreau recounts in the Daily Beast—but the showdown still caused serious issues like the downgrading of the US credit rating. "The obvious lesson from this entirely self-inflicted fiasco is never, ever to treat America’s bill-paying authority as a bargaining chip in political negotiations," Favreau writes. But House Republicans haven't learned the lesson, and once again they're holding the economy hostage to their demands. Because of the language we use to discuss it, many people think that raising the ceiling is "a green light to pile up more debt," while "breaching the debt limit would trigger an economic shutdown of epic proportions." So let's call Republicans what they are, says Favreau: "Hostage takers, unrepresentative of the once-proud Republican Party, and unfit to govern the greatest nation on Earth." Click for his full column. Meanwhile, in the New York Times, Paul Krugman agrees: Failure to hike the limit would be a "financial catastrophe," not only returning us to a likely recession but also shaking faith in US bonds—the "bedrock on which the world financial system rests."