Rob Shapiro on GOP Pushing The US Into Recession and Default

MAGA Has Launched A Second Attack on Our Democracy

I guess what we are learning this week is that if you attempt to overthrow an election in America, and there are no consequences, then everything becomes possible - including pushing American into recession and crashing the US financial system to do harm to your Democratic opponent.

Republicans realize they are in trouble. Their numbers are terrible. They’ve had three bad elections in a row. Their anti-woke, crime stuff isn’t working as they hoped. Their 2024 frontrunner mounted an insurrection against the United States, is a serial criminal, and remains unnaturally beholden to Putin. Their potential savior, DeSantis, sucks. Biden’s reelection rollout was very strong, capable, compelling. Their crazies keep doing crazy things. People are getting shot in their driveways, in schools, in their homes, everywhere. Their extremism on abortion could be the biggest political mistake we’ve seen in decades. The war in Ukraine is going pretty well for Biden and the West.

If you are a GOP strategist, there just isn’t a clear and obvious path to winning next year. It’s ugly out there.

Unless that is, you have a way of pushing America into recession, possibly default and financial chaos, and then blaming Biden for it.

Hello, May, 2023. The same people who attacked our democracy 2 years ago have launched a new assault on America, one which uses an unprecedented and dangerous legislative tactic to try to force outcomes they simply cannot achieve through the way we’ve been producing Congressional budgets since the 18th century - Republicans have decided to not pay America’s bills. WTF people? The goal? To push America into recession and possibly default in what has to be read and understood as a desperate, “break glass” political moment for the GOP. They are willing to do what is pretty much unthinkable and is a truly wild breach of democratic norms because they’ve run out of more conventional options. Their party is failing and so they are just going to try to blow the whole thing up and pray for the best.

My long-time collaborator Rob Shapiro has a very good essay in the Washington Monthly today which goes into the very real challenge President Biden now faces from a desperate and radicalized GOP:

Whether Kevin McCarthy realized it or (more likely) stumbled into it under White House pressure to produce his own budget plan, the GOP threat to scuttle the debt limit unless Democrats accept big spending cuts has set up a dangerous scenario for the president.  

If neither side blinks and the Treasury defaults in June, financial markets will swoon, and the shock to a vulnerable economy could quickly bring on a recession. Biden will rightfully blame the kamikaze MAGA Republicans for the carnage, and broad public outcry almost certainly will force enough House Republicans to capitulate in short order. But presidents always bear political responsibility for the economy. Biden could be an easy target for Donald Trump and other Republican presidential hopefuls for not averting the crisis and subsequent downturn. 

It’s also possible, even likely, that GOP donors, governors, and public opinion will force House Republicans to blink and accept a clean debt limit. And since Biden has promised to try to cut a budget deal with McCarthy once a clean debt limit is approved, its passage will likely be tied to a side agreement to cut spending in the fall appropriations.  

That’s also a treacherous course for the president. A similar scenario in 2011 forced Barack Obama to accept a major dose of austerity that kept growth low for years. This time, with growth already slowing, substantial cuts could tip the economy into recession as the president campaigns for reelection—and he won’t be able to shift the blame to anyone else.  

Rob goes on to say:

The economy can likely absorb modest spending cuts without tipping over, assuming no debt default. But Biden will need some House Republicans to accept such a partial deal. Like Clinton, Biden will have to plan for a stalemate that shuts down the government by galvanizing public opinion against McCarthy and the radical Republicans, so they shoulder so much blame that they’re forced to agree.  

Clinton pulled it off in late 1995, but he went into the fight with a more robust economy and approval ratings north of 50 percent. It will be a bigger challenge for a president with more modest growth and less public support. The good news for President Biden is that the House Republicans’ positions on accepting debt default and slashing federal spending are extremely unpopular. The bad news is that if he cannot pull off such daunting political jujitsu, a vulnerable economy sinking under the weight of a debt default or heavy austerity will give even Trump a real shot at beating him next year.  

We know that recession and default have become the GOP’s central 2024 electoral strategy because they told us so last week. As I wrote both Trump and the RNC attacked Biden for a domestic financial crisis that has not happened and will not happen unless McCarthy creates one. It’s as if they have already decided to crash the US economy, and have already incorporated this crash into their indictment of the Biden Presidency. That an event that has not yet happened has become so central to the emerging GOP narrative is a sign of how desperate they are to bring it about, and how far they’ve drifted from anything resembling the national interest.

So, what do we do? As the Hopium community knows I’ve been arguing that our greatest narrative opportunity this year is to win this big economic argument with Republicans. We need to study up, get loud and help our fellow Americans understand what is happening here. The MAGA GOP, led by their disgraced former President, is betraying the country again; they are willing to push the country into recession and default because they have no other way to challenge Biden; they are willing to bring significant harm to families across the US and the nation itself because they’ve lost control of their party to extremists, many of whom parrot Russian talking points about America.

What the GOP is doing is unacceptable, we need to say so, loudly, and in every way we can in the days ahead. Some additional resources to help you get ready for this deeply consequential moment in our politics:

• Sign up for my political briefing tomorrow night at 8pm EST. We will be discussing these economic challenges in more detail

• Come watch my next showing of With Democrats Things Get Better on May 9th. It is loaded with data and arguments which will be helpful to you.

• Read my analysis of the April jobs report. It has lots of data and graphs about the success of Biden’s economic strategy. My take on the recent Economist cover story about the success of the American economy is also worth a read.

As I often say there are two things we can do this year that will make our success next year far more likely - register millions of young voters and win this big economic argument with the GOP. Let’s put our heads down and get both of these things done in the coming months, together.

Onward - Simon