As Congress bickers over raising the debt ceiling, the prospect of the United States defaulting on its obligations for the first time in its history looms, with the potential for a downgrade of its credit and the higher interest rates that would inevitably follow.
Representative Tim Bishop said on Tuesday it would be a catastrophe for Long Island and the nation.
“If we don’t raise the debt limit at all, that means we are going to be able to do approximately 60 percent of what we normally do,” he said in a telephone interview. “That’s about the revenue that comes in monthly; it covers about 60 percent of what the government normally spends. We’d be engaged in triage. Do we pay the interest on the debt we already have; do we not pay a certain number of Social Security checks? Perhaps Gabreski Airport [in Westhampton Beach] can’t make payroll. Veterans at Northport [V.A.] Hospital might not get serviced.”
Mr. Bishop slammed Republican presidential candidates for their stubbornness on raising the debt limit.
“The Michele Bachmanns and Tim Pawlentys of the world are talking about defaulting on our debt, not paying Social Security benefits, closing veterans’ hospitals — this is what they’re talking about when they say they won’t raise the debt ceiling. . . . Extremists want those things to happen.”
Asked how he would solve the stalemate, the congressman backed Senate Majority Leader Harry Reid’s proposal, which the nonpartisan Congressional Budget Office has indicated cuts the deficit by about $2.2 trillion over 10 years and raises the ceiling through the end of 2012.
“The Reid proposal is not perfect, but it basically meets the two demands that the Republicans have said they absolutely have to have. One is that there be at least a dollar-to-dollar relationship between the amount cut and the amount we increase the debt limit. [It also] meets the requirement of no new revenue.”
Mr. Bishop explained his opposition to the bill that is before the House right now, Speaker John Boehner’s proposal, which raises the debt limit in stages over the next 18 months, largely because of threats from Moody’s and Standard and Poor’s, rating agencies that have threatened to strip the U.S. of its gold-plated AAA bond rating, which has never happened before.
“I oppose the Boehner proposal,” said the congressman. “First, substantively, the rating agencies are already saying that a temporary increase in the debt limit may not be enough to hold off a credit rating downgrade. A credit rating downgrade would be enormously difficult for our economy; it would increase the cost of borrowing; credit card rates, car insurance rates [and] mortgages would go up. This would be a tax on every single consumer in this country.”
He accused the G.O.P. of hypocrisy when it came to creating a friendly climate for business. “Republicans say businesses are plagued by uncertainty, but their proposal to raise the debt limit in two tranches and, particularly, attach the second episode of lifting the debt limit to $1.8 trillion in cuts, dramatically increases the uncertainty. They are proposing a solution that exacerbates their description of the cause of the [broader economic] problem.”
Mr. Bishop said his likely Republican opponent next fall, Randy Altschuler of St. James, who very nearly unseated him in the midterm elections last year, was ducking the issue.
“To my knowledge he has not gone on the record on anything; HR-1, the Republican budget resolution [this winter], and to my knowledge he has not gone on the record on Cut, Cap, and Balance [the Tea Party-backed deficit-reducing bill] or the Boehner plan or the Reid plan. His response always is, there will be plenty of time for a robust debate.”
Mr. Altschuler’s Web site indicates that he “opposes any increase in the national debt ceiling without significant spending cuts and comprehensive reforms like a presidential line item veto, a supermajority requirement to raise taxes and hard caps on federal spending,” putting him in the Tea Party caucus on the issue and indicating he’d likely have backed Cut, Cap, and Balance, the Republican bill that passed the House but is dead-on-arrival in the Democratic-controlled Senate.
Mr. Bishop maintained that Mr. Altschuler’s position “makes it virtually impossible to raise revenue because it requires a two-thirds majority of both chambers to increase revenue; their definition of increasing revenue includes closing oil and gas company loopholes that are impossible to defend. But if someone wanted to cut Medicaid for kids, we’d only need a simple majority.”
He said Democrats had done all they could to meet Republican demands.
“If we don’t raise the debt limit by Aug. 2, this is a problem owned exclusively by the Republican extremists in the House of Representatives.”