Another key moment in the debt ceiling fight: On MSNBC this morning, the head of the powerful U.S. Chamber of Commerce called on Republicans to stop using the threat of default to get the spending cuts they want.
Chamber president Tom Donohue didn’t do this quite as directly as he might have, but the plain meaning was clear. This is significant, because in doing this, he went further than other business leaders, who have merely issued a general call for a hike in the debt ceiling without pointing a finger at Republican debt ceiling hostage taking. Donohue, by contrast, said he wants to see a stop to the tactic of using the debt ceiling as leverage.
“When you get down to defaulting on the debt, you have a very, very serious question: What will happen to interest rates, what will happen to our relationships around the world?” Donohue said in an interview with Chuck Todd. “It could really hurt the economy.”
Donohue said he thought mounting debt and entitlements could also damage the economy long term. Then he added: “I think we have to let the folks up on the Hill use the assets they have while at the same time trying to tell them that using the debt is the least desirable of those.”
This is a key quote. The head of the Chamber, one of the most powerful GOP-aligned interest groups in the country, is essentially saying that using the debt ceiling as leverage to force spending cuts has to stop. This comes after the Financial Services Roundtable, the Business Roundtable, and other business groups all are insisting more generally on a debt ceiling hike.
Donohue’s quote is also a reminder of something that gets lost in the debate: Default itself isn’t the only thing that would damage our economy; the mere threat of default is also potentially damaging. Remember, in 2011, Standard and Poors downgraded U.S. debt partly because of GOP debt ceiling brinksmanship well in advance of any default. Small wonder Donohue wants an end to the nonsense.
Even the likes of Newt Gingrich and the Wall Street Journal editorial board have told fellow Republicans that if they continue with the debt ceiling standoff, the voices from the business community warning that they will take the blame for economic disaster will only grow louder, putting them at serious political risk. Donohue’s subtle warning to Republicans is the latest sign not only that the GOP’s threat of default is untenable in practical terms, but that Republicans can no longer be perceived to be willing to default — which only further undermines whatever leverage they supposedly had in the first place.