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The World Is Too Dangerous for Playing Games

This year has the potential to be a disaster. We face an almost unprecedented number of external challenges to American vital interests. Frighteningly, the House GOP’s threat not to raise the debt ceiling will cripple America’s ability to manage those challenges. The United States must deal with crises that, left unattended, could destabilize vital parts of the globe, increase the risk of nuclear war, and provoke massive new migration flows. If this sounds scary, I meant it to be so.

The domestic consequences of failing to raise the debt ceiling are bad enough. Goldman Sachs estimates that failing to increase the debt ceiling would immediately stop one-tenth of all U.S. economic activity. By way of comparison, during the Great Depression American GDP dropped that far over four years (1929-1933). Without a debt ceiling increase we cannot fund Social Security, Medicare, national defense – or much of anything else. The international consequences would be equally devastating. A U.S. default would undermine the status of the U.S. dollar as the world’s reserve currency, and tank markets across the globe.

For those who do not believe that 2023 may be as dangerous as I claim, I refer you to the Preventive Priorities Survey of 2023, produced by the Center for Preventive Action at the Council on Foreign Relations (CFR), America’s oldest and most authoritative foreign affairs think tank. (The CFR website is www.cfr.org). The Survey, which analyzes the views of leading foreign policy experts at home and abroad identifies current flashpoints that threaten vital U.S. interests. To list the scariest: (1) escalating Chinese military pressures against Taiwan could force a confrontation with the United States; (2) escalating war in Ukraine could spill over into NATO Europe or see the introduction of new weapons, i.e. cyberattacks or nuclear; (3) growing unrest in Russia over the Ukraine fiasco could destabilize a country that possesses thousands of nuclear weapons; (4) someone might launch a highly disruptive cyberattack against crucial U.S. infrastructure; (5) North Korea could trigger a crisis by demonstrating a credible capacity to hit American cities with nuclear weapons; (6) an Israeli strike on Iran could provoke Iran into shutting down oil and gas exports from the Persian Gulf triggering a world-wide energy crisis; (7) increased violence, political unrest, and worsening economic conditions in Central America and Mexico, aggravated by acute weather events, could fuel a surge in migration to the United States; (8) aggressive Chinese actions in the South China Sea could lead to an armed confrontation involving China, the United States, and/or U.S. allies; and, not least, (9) a military confrontation between Greece and Turkey would fracture NATO. Russia, for its part, has a vital interest in provoking trouble elsewhere, i.e., between Kosovo and Serbia.

A recent CFR-sponsored panel (see it on YouTube titled ‘What to Worry About in 2023’) illustrated the complexities in dealing with these flashpoints. Discussing the Taiwan scenario, the panelists noted that we may believe that Russia’s failures in Ukraine will convince Chinese President Xi Jinping that the use of force to grab Taiwan would fail. But what if Xi came to a different conclusion – that China could avoid Russia’s mistakes and strike while the United States and NATO were tied down by Ukraine. Panelists noted that, “we are all guessing. … We can’t get inside the mind of President Xi…” any more than we could get inside the mind of Vladimir Putin.

The U.S. administration needs to devote enormous time and effort to figuring out how to diplomatically convince Xi Jinping that he has drawn the wrong conclusions and deter China before the shooting starts. One panelist noted wryly that, “the problem is, it’s easy to dial up wars. It’s really hard to dial them back down once you start doing things.”

How does the United States deal with these threats in the midst of a worldwide economic meltdown provoked by a partisan desire to score points? A few days ago, Treasury Secretary Janet Yellen announced that the United States had hit the debt limit and was now taking “extraordinary measures to avoid default.” She warned that the Treasury Department was only buying time and could not sustain this much beyond mid-summer.

The Republican Speaker of the House Kevin McCarthy called for the administration to agree to unspecified spending cuts in return for lifting the debt ceiling. Yellen termed his demands as “very irresponsible.” She noted that the threat alone can disrupt markets.

The administration has warned that an extended standoff over the debt ceiling could destroy faith in the credit of the U.S. government and spur a deep economic recession.

Using the debt ceiling for leverage to reduce spending has raised particular concerns over potential cuts in defense spending.

As noted in an earlier column, former President Obama found himself in a standoff with congressional Republicans over the debt ceiling in 2011. Although he gave in to the GOP, just being close to the edge of hitting the debt limit sent stock prices plunging and disrupted markets. It was also the first time the credit rating agency S&P downgraded America’s credit rating. Other market impacts included raising the costs of mortgage rates and interest payments for the U.S. Treasury.

The debt ceiling is not the place to play games. The House GOP cannot muster the votes to kill Medicare, Social Security, and the IRS. They tried to kill Obamacare and it did not work. So the House Republicans have kidnapped the United States and are threatening to kill the hostage if the administration does not pay the ransom. Let’s call a spade a spade.

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