Today, Speaker of the House John Boehner addressed the Economic Club of New York, setting the stage for a heated battle within the Republican Party. Wall Street and big business are fearful of the Tea Partiers’ refusal to raise the debt ceiling without major spending cuts and without tax increases on the wealthy, which would be unacceptable to the White House and congressional Democrats.
The Street and big business are eager to tackle the budget deficit, but not by playing games with the debt ceiling. If the debt ceiling is not raised by August 2, when the Treasury predicts the nation will run out of money to pay its creditors and other bills, the full faith and credit of the United States could be jeopardized, leading to skyrocketing interest rates and a plummeting dollar.
The Tea Partiers, however, have a different agenda. Their primary aim is to shrink the size of government, and they are unwilling to reduce the national debt with tax increases, even on the wealthy. Wall Street and big business, on the other hand, would be willing to accept a small tax increase on the wealthy in order to secure a deal on raising the debt ceiling.
Boehner’s speech attempted to appease both sides, saying “everything is on the table” in order to reduce the nation’s debt. He also ruled out tax increases, but insisted on tying the debt-ceiling vote to a deficit-reduction deal, proposing cuts of trillions, not just millions. This proposal is similar to the Paul Ryan plan House Republicans approved last month, which was met with much opposition.
The Speaker of the House is taking a risky gamble by siding with the Tea Partiers. If the debt ceiling is not raised and the financial system begins to collapse, the GOP stands to lose not only Wall Street and big business, but also the rest of the nation.
