In the first few months of the 2011, the federal government will run out of cash. We will max out the federal credit card, and Congress will refuse to open another line of credit. Treasury won't have enough money to both run the government and pay back our lenders.
The implications will be dramatic, and possibly cataclysmic. We will stop funding up to 40 percent of all federal government activities. While the Treasury will feel required to pay back international investors to calm fears of a historic default, we won't have enough money to pay for Social Security, Medicare, homeland security, and the keep the federal government running. Workers will lose jobs. Companies would lose contracts. Businesses will lose confidence. Both inside and outside the United States, panic will proliferate. Global markets will roil and the US economy will tip from slow growth back into negative growth, double dipping into recession.
It sounds like a doomsday scenario. It's closer to reality than you might think. In fact, it's the likely outcome if RNC Chair Michael Steele and numerous GOP representatives from the Tea Party get their way.
After a year of running against deficits, newly minted Republicans in the House will face an ironic major vote in early 2011 to raise the debt limit. In a cruel twist of fate, the anti-debt party's first major vote would help the government go further into debt. The vote sounds suicidal. But the alternative is chaos. [What's the debt ceiling? Read here.]
Soon-to-be House Speaker John Boehner knows the debt ceiling vote will put new members between a rock and a hard place. Republicans were elected to both shrink government and increase its competence. A vote against the debt ceiling shrinks government by making it incompetent. Such obstructionism could scald the party, just as government shut-down scalded Newt Gingrich's coalition in the mid-90s.
The GOP House majority can't afford a government shutdown or an international run on Treasuries in its first six months. But it also can't afford to give up its mandate in the first six weeks.
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Sick of Doom and Gloom? Here's the Case for Optimism in 2011
So Boehner will bargain. In return for the debt ceiling concession, he'll promise the Republican caucus some big symbolic votes to flex conservative muscle in the first 100 days. Think health care and stimulus repeal, plus massive spending cuts to labor, education and welfare.
Mike Franc, vice president of Government Relations at the Heritage Foundation shared his glimpse of the future. Pass a bill to repeal Obamacare, and let it sit in the Senate, he said. Pass a bill to stop funding for NPR, and let it sit in the Senate. "Do this every day," he told me. "Get a bevy of proposals limiting government action," and let the Democrats in the Senate take the blame for not passing them.
It's a sly strategy, establishing the Republican House as the firebrands trying to change government and the Democratic Senate as the old guard standing in the way of the will of the people. Popular opinion of Congress continues to fall. Partisanship continues to rise. The fragile dream of bipartisanship in the 112th Congress shrinks and shrinks.
It doesn't mean total gridlock. The things that must happen will happen. We must raise the debt ceiling, therefore we will. We must extend the Bush tax cuts, this year or next year, therefore we will. We must patch the AMT, pass the doc fix, and appropriate money for government operations. We almost certainly will.
But beyond that, every issue, every debate will be shrouded in the dark storm clouds gathering between the fiery GOP House and a defensive Democratic majority in the Senate.
Tell me why I'm wrong.
(Oh, and the case for optimism is here.)