The debt ceiling war waged by reckless GOP has already undermined America’s global standing

Even if the tentative deal between the White House and the GOP to raise the debt limit is finalized, the latest debt ceiling drama has displayed a country gone bonkers. The eagerness of GOP hard-liners to trigger America’s first default ever and rattle the entire global economy — all for domestic political gain — is stunning. It presents a damning picture of a broken U.S. political system to the entire world.

Writing on America’s “debt ceiling theatre of the absurd,” the Financial Times’ distinguished economist Martin Wolf asked: “How is one to assess the possibility of a voluntary default by the world’s most important country? Is something as mad as this really likely to happen?”

The answer to his question is, absurdly: Yes, it still could.

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Both our allies and adversaries grasp that America’s global role is shifting. It will no longer act as the world’s policeman. In this new, bipolar world, the United States and China jostle for position while Russia plays anti-Western spoiler.

Yet our allies still rely on America’s economic stability and political leadership at a time when democracy as a workable political system is under question. China’s Xi Jinping has told President Joe Biden that democracies will fail because they take too long to muster a consensus. Only autocracies, claims Xi, can handle 21st-century challenges.

This manufactured debt crisis might as well be a secret Chinese plot to prove Xi’s vision correct.

Only recently, President Biden had to hasten back to Washington from the G-7 meeting in Japan in order to deal with the debt crisis by a June 5 deadline. He had to cancel important visits meant to solidify our ties to the Asia-Pacific, where China seeks to dominate.

This rushed departure laid bare America’s political dysfunction to dismayed allies and gleeful adversaries. As National Security Council spokesman John Kirby put it: China and Russia “would love nothing more than for us to default so they could point the finger and say, ‘You see, the United States is not a stable, reliable partner.’ They know that our ability to pay our debts is a key part of U.S. credibility and leadership around the world.”

So the ability of Republican hard-liners to ignore the global blowback from their economic gamesmanship — even if Congress passes a deal at the last minute — is deeply disturbing. Donald Trump, the leading GOP candidate for 2024, actually urged Republican members of Congress onward. “If they don’t give you massive cuts, you’re going to have to do a default,” he instructed.

Even more irresponsibly, Trump insisted that a default was no big deal. “It’s psychological,” he said. “It could be maybe nothing, maybe it’s a bad week, or a bad day, who knows.” With that casual dismissal, Trump ignored Treasury Secretary Janet Yellen’s warning that a default would produce an “economic and financial catastrophe.”

At present, U.S. Treasury bills are trusted as the safest place for foreign governments and institutions to invest their cash reserves, and those loans basically fund our deficit. If that trust withers, foreign capital will move elsewhere — a process that is already beginning — which will upend the U.S. economic system.

The GOP response appears to be: Who cares?

Such recklessness further unnerves America’s allies, already dismayed by the widespread GOP refusal to recognize the results of the 2020 election. They have not forgotten that U.S. economic misbehavior precipitated the 2008 global meltdown and that Washington nearly defaulted under GOP pressure in 2011. They know this whipsaw over the debt ceiling will reoccur in the future unless U.S. laws are changed.

This is more fodder to convince Xi, and many countries looking to China for a political example, that his prognosis about democracies is correct.

What is so maddening about the GOP’s debt ceiling theater is its willingness to sacrifice America’s reputation — and economy — for nothing. Any claims that this farce is really about lowering the deficit are false.

The United States has an outdated system of having Congress raise the debt ceiling yearly to cover obligations already incurred in the previous fiscal year. It isn’t meant to be misused to force future spending cuts that one political party can’t achieve by legislative means.

Until recently, the debt ceiling increase was automatic. Since 1960, Congress has raised, extended, or revised the debt limit 78 separate times — 49 times under Republican presidents and 29 times under Democratic presidents, according to the U.S. Department of the Treasury.

Under Trump’s presidency, Republicans raised the debt ceiling three times, with no preconditions. They had to raise it because Trump’s tax cuts for the wealthy and for corporations had raised the national debt by around $7.8 trillion.

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Trump’s tax cut folly accounts for a major share of today’s budget deficit. Yet the GOP won’t consider raising taxes but insists on slashing discretionary (largely social safety net) spending, which is only a very small part of the overall budget. In other words, the Republicans are willing to risk global economic chaos to pursue their narrow aims.

Let’s hope House Speaker Kevin McCarthy and Biden can finalize their agreement before default time. But even if they do, the same crisis will reoccur down the road.

The GOP and Trump are playing a game that could eventually convince foreign investors that the U.S. is no longer trustworthy. It encourages our adversaries — notably China — to suspect our political system is permanently broken, which is a danger to U.S. security. Does the GOP care?