S&P Tells Tea Party GOP What “Not Raising the Debt Ceiling” Means in Practical Terms

Here’s the news story.  It’s absurd that it has gone to this point.

NEW YORK (CNNMoney) — More than 40 House Republicans on Thursday met with a top official from Standard & Poor’s and representatives of other Wall Street groups to hear what could trigger a downgrade of the U.S. credit rating.

“It was a lively discussion,” said the meeting’s organizer, Rep. Nan Hayworth of New York, who characterized the information the lawmakers were given as “nonpartisan,” “dispassionate” and “objective.

Rep. Mike Pompeo of Kansas stressed that “one of the … messages they had for us today that was unmistakable — that if we kick the can down the road, it’s a bad outcome for U.S. Treasuries.”

The other message: Raise the debt ceiling.

[full story]

The sad thing?  Even after being told that they are completely conceptually wrong about what the “debt ceiling” is, or how not raising it would work, they still double down on the stupid.

The Bipartisan Policy Center has estimated that the Treasury wouldn’t be able to pay nearly half of the bills coming due in August and would temporarily cut government spending by 44% immediately, with adverse effects on the economy.

But some Republicans have suggested the Treasury would be able to harvest cash from various investments to make up for the shortfall in revenue.

Two members who attended Thursday’s meeting on Capitol Hill seemed to suggest as much again, although they said things could get very serious by Aug. 15, when Treasury must make a large interest payment to investors and rollover a sizeable amount of debt.

“Starting August 2, I’m sure some decisions will have to be made. But it won’t be catastrophic. But clearly each day will be important after that. And I think August 15 is going to be, potentially, a very serious point in time,” Rep. Charles Boustany of Louisiana told CNN.

That part I bolded up there?  Complete and utter idiocy.  What Republicans are now suggesting we do is the exact same thing the Treasury Department has been doing since we hit the limit back in May.

I’m not sure exactly how the meeting went, but I did find this…which is probably a pretty close approximation.

Code_Archeologist [TotalFark] Quote 2011-07-22 12:45:09 PM
A summary of the meetingS&P: Not raising the debt ceiling would be a bad
GOP: …for Obama
S&P: No… for everyone. Because it would raise interest rates
GOP: Which is a good thing
S&P: No… that is a bad thing because that would make it more expensive to pay back the debts that are already outstanding
GOP: And that’s a good thing, because then we could cut more government programs
S&P: No… its a bad thing, because of compounded interest. If the debt ceiling does not go up and you cut spending to make up the difference you will eventually run out of things to cut
GOP: And then we win!
S&P: No… then the United States implodes because it will be unable to service its creditors.
GOP: Then we will cut those government services to
S&P: facepalm… no, the nation would experience run away inflation like a third country and you will have to raise taxes in order to rescue the economy.
GOP: Oh! This is just another tax and spend Democrat party conspiracy, we are done talking to you now.
S&P: What?! Are you kidding? We are being serious here, you are going to destroy the country.
GOP: sings LA LA LA! LA LA LA! We can’t hear you