The once-vaunted unity of congressional Republicans has become a distant memory, crumbling under the pressure of the deadline to raise the government's credit limit.
As the internal fissures widened and another White House meeting ended inconclusively, the economic stakes rose. Moody's Investors Services said Wednesday it had placed the U.S. government's AAA bond rating on review for possible downgrade because of the possibility that the debt limit "will not be raised on a timely basis, leading to a default on U.S. Treasury debt obligations."
As the internal fissures widened and another White House meeting ended inconclusively, the economic stakes rose. Moody's Investors Services said Wednesday it had placed the U.S. government's AAA bond rating on review for possible downgrade because of the possibility that the debt limit "will not be raised on a timely basis, leading to a default on U.S. Treasury debt obligations."
Federal Reserve Chairman Ben S. Bernanke warned in congressional testimony that failure to raise the government's debt limit by Aug. 2 would be a "huge financial calamity."
And Senate Minority Leader Mitch McConnell (R-Ky.) issued a political warning that the party risked losing the next election if Republicans persisted on their current path.
So far, such warnings have had little impact in the House of Representatives, where many members of the Republican majority, particularly newly elected "tea party" conservatives, have vowed to let the government default on its bills rather than vote for any debt ceiling increase. House GOP leaders have said they will vote for an increase only if it is accompanied by a balanced budget amendment to the Constitution, deep cuts to Medicare, or other spending restrictions that President Obama has rejected.
"Currently, there is not a single debt limit proposal that can pass the House," Majority Leader Eric Cantor (R-Va.) said in a statement Wednesday morning. Cantor has been at odds with McConnell and House Speaker John A. Boehner (R-Ohio) in the last several days.
In a radio interview with conservative commentator Laura Ingraham, McConnell said the economic impact of a default would give Obama an opening to blame the GOP for the country's bad economy.
"Look, he owns the economy," McConnell said. "We refuse to let him entice us into co-ownership of a bad economy."
McConnell had offered his own "backup plan" Tuesday to end the stalemate — a proposal under which Congress would essentially surrender power to raise the debt ceiling and hand responsibility solely to Obama. He was excoriated by many conservatives in his party.
"Wow. Stupid idea," was the tweet from Rep. Jason Chaffetz of Utah.
McConnell fired back Wednesday, saying Republicans who think that the public will support them in the event of a government default were disastrously wrong. Default "destroys your brand," he said.
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Source: Los Angeles Times
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