As the U.S. House of Representatives prepares to vote on a measure to reduce the federal deficit and raise the debt ceiling, a clear partisan divide remains over how to achieve the debt reductions, and even over how deep an impact a default on the nation’s debt would have on the economy.
Wisconsin congressman Reid Ribble is ready to vote on raising the debt ceiling. The freshman Republican said it’s a major compromise, but he’s voting for Speaker John Boehner’s deficit reduction plan. Passage will send the package to the Senate, as Monday’s deadline for raising the debt ceiling approaches. “I think it can happen before the Monday deadline, but if it doesn’t, it’ll be because Harry Reid chose not to,” said Ribble. “I have a lot of colleagues of mine who came here who said they would never vote for a debt limit increase, and today you’ll have two times where the House has voted to raise the debt limit in excess of a trillion dollars, with many Republicans who said they never would do it.” Ribble said he’s voting for Boehner’s proposal contingent on Boehner bringing a balanced budget amendment to the floor.
It’s expected that only a handful of Democrats will vote for Boehner’s plan, which would reduce the federal deficit by an estimated $915 billion dollars over ten years. “What we need is a comprehensive, long term, bipartisan agreement ong getting these structural deficits under control, but in a balanced fashion,” said La Crosse Democrat, Representative Ron Kind. Kind says too many people believe budget deficits can be solved overnight — and that allowing the federal government to default on its debts would be no big deal. “Representative Paul Ryan indicated that defaulting is no big deal. Senator Ron Johnson has publicly commented a number of times that he doesn’t think defaulting on our nation’s obligations is anything to be too concerned about,” said Kind. “I think, just from my own economic analysis, they are dead wrong. There are going to be severe economic consequences if we do go into default.” Ribble is not sure whether an immediate default is in the cards, but concedes failing to raise the debt ceiling would not be good for the economy. “There are options that the federal government has. However, it certainly wouldn’t be good for the economy,” he said.
UW Madison economist Andrew Reschovsky, who is still cautiously optimistic that a crisis can be averted, said the deep spending cuts that will be included in any deal could hurt the economy. “But, nevertheless, if we end up defaulting, that will mean starting next week or the week after, there will be cuts in Social Security benefits, cuts in government payments to businesses that provide it service,” said Reschovsky. “Those will have an immediate impact on the economy. An immediate negative impact.”