Shutdown Countdown, Part 4

TPM's Brian Beutler discusses the GOP extortion plan to blow up the bond market in order to get what they want.

It's a classic hostage situation. And the key question is whether Republicans are willing to hold ranks and exert their leverage longer than Democrats are willing to call their bluff. If neither side blinks, and Congress, led by Republicans, tells the world, "we're not going to pay off our debts," the economic fallout would be dramatic. If Republican demands are unreasonable and Democrats refuse to cave, then Republicans will be forced to decide whether to let the country -- and particularly their wealthy base, and donors on Wall Street -- take a huge hit, or let down the Tea Party, which is practically itching for a shutdown.

Pitting the Tea Party versus the big banks and other GOP Wall Street donors is exactly why this is a losing measure for the Republicans.  The only way they win is if the Democrats fold and cave in to their demand...and that's the problem.

So far, Republicans are standing firm.

"I think it will not be without some strings attached if it happens, because they're going to have to seriously address spending and debt," Senate Minority Leader Mitch McConnell told Fox News last week.

Sen. Tom Coburn (R-OK) suggested he'd like to see over $300 billion in spending cuts before he'd end a filibuster on the debt ceiling.

On NBC this weekend, Tea Party leader Jim DeMint (R-SC) joined in on the fun: "No, I won't. Not-- not unless this debt ceiling is combined with some path to balancing our budget: Returning to 2008 spending levels. Repealing Obamacare," DeMint said. "We have got to demonstrate that we have the resolve to cut spending." 

The question is who wins here?  If the Dems do fold and actually give the Republicans hundrerds of billions in spending cuts or an across the board spending freeze or both in the middle of a recession, the economy will continue to collapse and Obama will be blamed.

Of course the Republicans will continue to rabidly assault Obama no matter what he does.  But in order to take him down and win in 2012, they're perfectly willing to annihilate our economy, or to try, at least.

As I said Sunday, the Powers That Be on Wall Street won't let this happen.  The Democrats must know this.  All they have to do is stand firm.

Of course "Democrats standing firm" is not even close to the realm of a guarantee.

On the other hand, at least one new incoming Republican says he will shut down the government unless health care reform is repealed completely, so the odds of the GOP doing something colossally stupid is pretty high as well.