Divided GOP threatens economic crisis over Obamacare

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Republicans in Congress are divided over two strategies to dismantle Obamacare. Senator Ted Cruz hopes to defund it by provoking a government shutdown, whereas House Speaker John Boehner hopes to convince Democrats to delay phasing in some of its key provisions by threatening a global financial crisis.

Rather than approve spending for the entire federal budget, which has only happened four times since 1977, the House and Senate must agree on a temporary budget to keep the government running until mid-November. This stopgap measure, or “continuing resolution,” must be passed by the end of September, or else large swathes of the federal government will simply stop.

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In a 21-hour-long speech in Congress, Senator Cruz fought to keep the US government unfunded so long as Obamacare is part of its spending budget. Over the weekend, House Speaker Boehner unexpectedly put his weight behind his more conservative Republican colleagues, who refused to take on the Senate bill that Cruz spoke out against. The Senate bill includes health care spending; the House bill does not. If and when the two do not agree on a bill to fund US spending, then the government goes into shutdown. Speaker Boehner will attempt to sway public opinion through this shutdown, but even if the move backfires, it will allow Republicans to prepare for a far more dangerous debt ceiling battle.

The debt ceiling is the point at which the Treasury Department cannot borrow any more funds to pay for deficit spending that Congress has previously approved. The Treasury is expected to reach the debt ceiling sometime after 18 October. If Speaker Boehner refuses to raise the debt ceiling unless Democrats agree to delay the implementation of Obamacare for a year, then the US government could to default on many of its bills. The collapse of the debt ceiling could raise interest rates and reduce  global confidence in the US dollar.

No matter how damaging or irresponsible a government shutdown might be, the United States defaulting on its debts would be far more disastrous for its long-term recovery and the global economy.

Over the years, Republican opposition to Obamacare has played well with voters, who return to the polls in 2014. Recent opinion polls, however, have overwhelmingly shown that the American public would overwhelmingly blame Republicans for a government shutdown. As a result, a shutdown could diminish the party’s prospects for retaking the Senate and strengthening its majority in the House.

Meanwhile, many Republican congressmen face primary challengers from the far right. Even though a government shutdown over Obamacare may damage the Republican Party’s prospects overall, it is still in the political interests of individual congressmen to support a hardline strategy against President Obama’s signature health care law.

The real danger is that Speaker Boehner could try to avert the political consequences of a government shutdown by convincing his divided colleagues to prepare for a heated debt ceiling debate in October, with Obamacare as his key leveraging tool. The political costs of Senator Cruz’s government shutdown may be too great for the fractured party to bear, but the economic costs of Speaker Boehner’s debt ceiling collapse would be too much for the recovering country to weather.

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