More Than Half Of Republicans Prepared To Let US Default

Tyler Durden's picture

Yesterday, Citigroup floated the idea that a temporary government shutdown once the full array of debt ceiling extension measures expires some time in mid/late February, is possible, which would also mean the first technical default of the US depending on the prioritization of US debt payments. Now, Politico reports that this idea is rapidly gaining support within the GOP and that "more than half of GOP members are prepare to allow default unless Obama agress to dramatic cuts he has repeatedly said he opposes." It gets better... or worse depending how many ES contracts on is long: "Many more members, including some party leaders, are prepared to shut down the government to make their point. House Speaker John Boehner “may need a shutdown just to get it out of their system,” said a top GOP leadership adviser. “We might need to do that for member-management purposes — so they have an endgame and can show their constituents they’re fighting.”" Of course, at this point not even a US government bankruptcy may send the ES more than one or two ticks lower. After all, there is no risk of anything happening anywhere, any time.

More from Politico:

House Republicans are seriously entertaining dramatic steps, including default or shutting down the government, to force President Barack Obama to finally cut spending by the end of March.


The idea of allowing the country to default by refusing to increase the debt limit is getting more widespread and serious traction among House Republicans than people realize, though GOP leaders think shutting down the government is the much more likely outcome of the spending fights this winter.


"I think it is possible that we would shut down the government to make sure President Obama understands that we’re serious,” House Republican Conference Chairwoman Cathy McMorris Rodgers of Washington state told us. “We always talk about whether or not we’re going to kick the can down the road. I think the mood is that we’ve come to the end of the road.”


The country would eventually default if House Republicans refuse to raise the debt limit, which the Treasury estimates will hit in late February or early March. The government would shut down if House Republicans instead were to refuse to extend the law funding current government operations on March 27.


Boehner assumes he can ultimately talk members out of default, but he is so wounded and weakened from last month’s tax-hike battle that the speaker might very well be wrong. Obama assumes Republicans would never be so foolish as to put the economy at risk to win a spending fight. Conservatives say he’s definitely wrong on that score. They say he’s the foolish and reckless one for piling up $6 trillion in debt on his watch.


The coming spending fights make the Christmastime tax increase battle seem like child’s play. While everyone knew the tax drama would end with the rich paying more taxes, no one can telegraph how the coming spending fights will unfold. And the economic stakes are more dire.


“For too long, the pitch was, we’ll deal with it next time,” said Rep. Jason Chaffetz, a conservative from Utah. He said GOP lawmakers are prepared to shut things down or even default if Obama doesn’t bend on spending. “No one wants to default, but we are not going to continue to give the president a limitless credit card.”


Starting Monday, Boehner will huddle with his leadership team to discuss his preliminary thinking on a spending strategy. A source who attended meetings to prepare for those private talks said GOP leaders are authentically at a loss on how to control members who don’t respond to the normal incentives of wanting to help party leaders or of avoiding situations — like default — that could be public relations nightmares.


And while historically a US default would send the USD soaring on a flight to safety, this time around nobody knows what will happen, as the algos out there are, for some amusing reason, pushing more capital into the EUR. And with the weak USD to strong ES correlation, it just may be that a US default would send the S&P 500 limit up.


Perfectly rational "market."

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GetZeeGold's picture



I'll believe it when I see it. Beohner will have to find his nuts first.

TheCanadianAustrian's picture

Maybe today. Just wait until the time comes.

trav777's picture

this will just alienate "moderates" who watch fucking CNN.

Meanwhile, the demoncraps will rally around the devil and will NEVER break ranks.  It's prison theory political system.

GetZeeGold's picture



Being moderate is getting really expensive.

THX 1178's picture

Don't wild swings in the marketplace trigger derivatives or something?

GetZeeGold's picture



It's suppose to......but there's no way in hell we're going to let it happen.

krispkritter's picture

Boehner's a Bitch, throw the switch!

(I think they're just looking for an excuse to further delay tax refunds. Broke bastards...yeah, I'm kidding. Maybe)

AldousHuxley's picture

US default would hurt republicans the most since they depend on government welfare in defense spending and giving military pensions to high school drop outs and social security medicare to worthless idiots on global labor market.


EXCEPT oil rich states.





espirit's picture

Like, Headfake man...

Public acceptance or derision?

I'm sure it was derision that killed the trillion dollah poodle coin. Make it so with the budget. 


Bicycle Repairman's picture

Nobody is shutting down the government.  The Republicans' BS veneer is getting torn off and they are in a panic.  They need to desperately maintain some semblance of credibility.  They are a nanometer away from rump party status.

JLee2027's picture

Take the blinders off. Both parties are in the same boat. If the Democrats can't spend, they don't appeal to anyone. 

Dick Gazinia's picture

There would not be a default.  Tax revenue would still be coming in and debt payments would be made just everybodies gubment cheese would have to take a hit.

JLee2027's picture

I believe Manatory (required by law) spending now exceeds the tax revenues from all sources. So, yes that would be a default.

I just googled it and found this, so I am correct:

3) In Fiscal Year 2011, the federal government collected $2.303 trillion in tax revenue. Interest on the debt that year totaled $454.4 billion, and mandatory spending totaled $2,025 billion. In sum, mandatory spending plus debt interest totaled $2.479 trillion… exceeding total revenue by $176.4 billion.

For Fiscal Year 2012 which just ended 37 days ago, that shortfall increased 43% to $251.8 billion.

11b40's picture

Dick Gazinia said "debt payments would be made just everybodies gubment cheese would have to take a hit."

Brush up on your critical reading skills.  His point is, they would juggle the books for a bit, but there would be no default....reduce payments, send some home, etc.

Bicycle Repairman's picture

Whether the parties are the same or not isn't the point here and you missed it completely.  The point is one of the parties has been caught in a situation that questions its very existence.  The two party system is a fraud, but the people who run things find the illusion of two parties to be useful.  Also the careerists who depend on the Republican party are plenty worried.  One part of the illusion and perhaps the entire illusion is in trouble.

11b40's picture

Absolutely incorrect, JLee.  It is you wearing blinders.  The Dummycrats sre in a far sturdier boat on the National level, which is why Obummer has 2 election victories under his belt and the Dems picked up seats in both the Senate and the House.  The Republicants are seriously divided, and with the Tea Party hijacked by the neocons & dark special interest money, and compromised by the sorry candidates they supported/elected, they are headed for the sewer.

Obummer just kicked their asses at the polls and again on the tax cut issue.  He is about to kick it again on the debt ceiling.  this is almost too easy for him, because these Republicant fools in the House are totally tone deaf.  Already, Michelle Bachman is working on new dead-end legislation to end "Obammacare".  They are also busy trying to de-fund planned aprenthood again, plus the mental midget from GA, Dr. Phil Gingry, is busy talking about "legitimate rape".  Pity poor Bonner, trying to herd these cats.  Dummer than dirt, but from "safe" gerrymandered districts, they only care that they personally get re-elected, regardless of cost to their party or the country.  Anytime a half-way sane Republicant puts forward a centerist position, the loons raise a ruckus and shout him down.  The public perception of the GOP gets worse by the day, and perception becomes reality at the polls.

Try to watch this play out with an unbiased eye.

JLee2027's picture

I'm not incorrect. The system has been gamed by the age-old-method of bribing the masses with entitlements and rigged voting that doesn't use paper ballots. It doesn't take any real skill to hand out money and assume control. It works until the entire scam blows up when everyone goes bust as once. This has been repeated throughout history.

And it will end. And when it does, both parties will be blamed and finished forever. The Democrats will be blamed for causing it and the Republicans will be blamed for not stopping it. 

CH1's picture

These are just predictable head-fakes.

In the end, they will do as they are told.... as always.

Sudden Debt's picture

They'll whisple their tails like a doggy who wants a cookie.


johnnymustardseed's picture

Republicans never cared about deficits until it became politically expedient from them to do so. Remember what Cheney said,  "reagan taught us that deficits don't matter"

With 100 trillion in unfunded liabilities it is a stretch to blame Obama for all the debt problems

knightowl77's picture

But supposedly they care NOW.....the Demoncraps still don't care....

Almost 6 TRILLION in new debt in 5 years and the Obozo wants to spend more. He is a dangerous MORON.

The repugs were very late to the party, but they claim to get it now, we'll see.

A Nanny Moose's picture

The O'bamabot cared back when he was a senator.

JLee2027's picture

Cheney said,  "reagan taught us that deficits don't matter"

Except there's no proof Cheney ever said that. It was a rumor started by the Democratic Underground boards.

11b40's picture

Wrong again.  There is plenty of documentation, and it was widely discussed at the time he said it.  Take your dis-inmformation elsewhere.  B.S. doesn't work well here.

Cheney to Treasury: "Deficits don't matter"

Former Treasury Secretary Paul O'Neill was told "deficits don't matter" when he warned of a looming fiscal crisis.

O'Neill, fired in a shakeup of Bush's economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from "the corporate crowd," a key constituency.

O'Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. "You know, Paul, Reagan proved deficits don't matter," he said, according to excerpts. Cheney continued: "We won the midterms (congressional elections). This is our due." A month later, Cheney told the Treasury secretary he was fired.

The vice president's office had no immediate comment, but John Snow, who replaced O'Neill, insisted that deficits "do matter" to the administration.

Source: [X-ref O'Neill] Adam Entous, Reuters, on AOL News Jan 11, 2004

JLee2027's picture

Oh excuse me it was a book written by a fired sell books. Boy that's proof.

No, it's not proof.

11b40's picture

Geez, dude....just google this shit & stop worshipping at the party altar.  There are many accounts that were published around the same time, and Cheney NEVER denied it.

I lived this stuff in real time.  Cheney actually meant that deficits don't the voters, because they won the elections and could do as they wanted regarding the deficits.  And run them up, they did  Paul O'Neil was not on board with their reckless spending and he was fired by Cheney.

That does change the conventional meaning of the way the dummycrats use the quote, but Cheney said it, and they were about as reckless and irresponsible as could be.

You work for Faux News?


JLee2027's picture

Cheney isn't going to comment on some book....sheesh come on.

I don't worship any party, except truth. But you do.

No more replies. You are a hack.

TerminalDebt's picture

He can borrow 2 from Nancy Pelosi, she has too many nuts.

In any case, with a name like Boner you are expected to have nuts

JPM Hater001's picture

He's crying on them right now.

MFLTucson's picture

Pelosi is wearing his and Reids!

tiwimon's picture

Boehner find his nuts?


Impossible, (s)he has a mangina. 


Someone with that little will and backbone has to, its just the natural order of things.

If Boehner even has a man card it needs to be shredded. 

azzhatter's picture

Boner AKA Cockbreath will do whatever his masters tell him to do. He swallows, not a spitter

FL_Conservative's picture

Maybe he could borrow Nancy Pelosi's.

NewAmericaNow's picture

The GOP citizens are as dependent on Govt largess and salaries as the democrats. If the US defaults, Social Security, Medicare, etc will take a big hit. What about the millions of high paying govt jobs cut and the ensueing increase in social service spending that will create. There is no easy way out. America is devolving into chaos and there is no real solution and the politicians know it. Why  do you think they want the guns? It's not because of twenty school children. They all know what is coming. I think it would be wise to brace for the inevitable impact of economic crisis that is fast approaching.

The Second Rule's picture

It's got nothing to do with testosterone levels. It's got everything to do with discretionary spending, most of which goes to security. We're in the hole to the tune of about 1/2 a trillion per year. Want to balance the budget. Here's an easy almost 100% painless way to cut the deficit in half overnight.

1) Get rid of the absolutely useless TSA.

2) Slash the Dept of Homeland security. It's mostly topheavy with bearucrats anyway. It's overdue for pruning.

3) Get rid of at least half the forward deployed military bases around the world which serve no fucking purpose whatsoever, other than tyo flesh out the resume of some bloated ass 2 star generals.

4) Stop throwing money at so many defence programs that haven't proven their value or worth, and in the process get rid of some bureaucrat brass all across the armed forces.

The net result would be a leaner, smarter military. We'd actually be more secure, not less. And AT LEAST $250 billion would be cut from the deficit overnight. How fucking hard is that?

Panafrican Funktron Robot's picture

Everything you just mentioned is designed to maintain a slipping grip on dollar hedgenomy.  The established power structure in the US/UK is up shit creek without it.  They don't want to be up shit creek.  Ergo, "defense"/"security" spending.  I promise we don't have a say in the matter.  Any threat of actual cuts will be answered by yet another false flag.  

Chewybunny's picture

Except that even if you cut the entirety of the military budget you'd STILL have a deficit...So yeah, no, not the best solution.

midtowng's picture

It happened in 1995. I can see a short-term shutdown happening.

JPM Hater001's picture

Yes, I remember 1995.  We had a functioning economy that didnt freak out.

Vendetta's picture

oh yeah, I remember when we had a functioning economy ... it was a long time ago.  'Free trade' fixed that problem for us.

CrimsonAvenger's picture

The real risk, at least from their POV, is that the public sees how much better life is with less government.

Shevva's picture

We had a public sector stike last year when all the public sector leechs went on strike for a day, the only people effected where the mothers and farters that had to take a day off work to watch the kids and the shops (The didn't bother with the picket lines as they where deserted).

The Second Rule's picture

We also had jobs, which thanks to NAFTA and GATT and free trade are now all over in China.

Thanks Clinton! Thanks Wall Street! Way to fuck the country!

AGuy's picture

"Yes, I remember 1995. We had a functioning economy that didnt freak out."

in 1995 the Budget Defcit was only $165 Billion and the economy was in a mild recovery,  the dollar still had some value, and the federal gov't was NOT insolvent. I suspect a shutdown in 2013 would have some serious ramifications. I worry about a  sudden collapse of the dollar as Congress adopts a "scorched earth" mentality that ends up destroying the country. I feel its like Rome in 410 where the Barbarians (spendacrats) have threatened the state. If they don't give in, Rome will be sacked, and never recover. I perfer a few more years of can kicking so I can finish my preparations for the end of the United States. The US is insolvent, Any attempt to reverse this is futile and will just decrease the time left. Better to Kick the can as far as it can be kicked.




Eugend66's picture

Collapse? Bring It!!

AGuy's picture

"Collapse? Bring It!!"

Kick the can! Some of us aren't prepared yet. I doubt you are prepared.


AccreditedEYE's picture

Just like the debt ceiling, the Republicans will CAVE when ES goes lock limit down... these guys are a dime a dozen. They see weakness in financial markets and actually believe that it means something material. Expect nothing less.

TerminalDebt's picture

Agreed, now if only I can find a way of betting my house on them caving I would be rich.

spastic_colon's picture

yes and only after hours, when they will be back to green right before cash open

Inthemix96's picture

Will the Boner cry?