By Mick Krever, CNN
An American default on its debt could do “nothing good” for the economy, either in the U.S. or abroad, Former Republican Senator Judd Gregg told CNN’s Christiane Amanpour on Monday.
Gregg spoke with Amanpour as the U.S. faced dual financial crises: An impeding government shutdown imposed by a congress unwilling to fund the government, which could come Monday night, and a possible default on the government’s debts, which would come in about three weeks.
It is that second problem, a default on America’s debts, that would be the much “bigger problem,” Gregg said.
“It would,” he told Amanpour, “obviously [have] significant ramifications for the country and for our fiscal policies.”
There are a group of Republicans in the House of Representatives who do not want President Obama’s healthcare reform – dubbed Obamacare – to go into effect, and are willing to do anything possible to block it.
Congress itself approved Obamacare, the president’s signature legislative achievement, when it passed the bill three years ago and made it law
“The problem here is very fundamental,” Gregg said. “There are two things which are not negotiable. One is killing Obamacare. The president is obviously not going to agree to do that – that’s his signature proposal. And Republicans aren’t going to agree to raise taxes.”
“If they try to reach an agreement on those two grounds, agreement can’t be reached,” he said. “But there’s a huge area in between those two points, such as reforming our entitlement systems or just doing very targeted action in the area of spending restraint that could be accomplished, and which could be part of an agreement for increasing the debt ceiling.”
Gregg said that responsibility for the impasse lies with both Republican and Democrats, blaming the president for failing to negotiate with his congressional colleagues.
But it was clear that the former Republican senator saw much fault within his own party.
“There are a few people in our party who don’t seem to understand the process of governing,” he told Amanpour.
“I think they’re pursuing it for personal political gain,” Gregg said. “There’s a very small group of folks in our party who are gaining significant national attention, and they’re raising a huge amount of money” by saying that they won’t increase the debt ceiling unless Obamacare is delayed or repealed.
But not only would a default be terrible for the economy, he told Amanpour, it would be politically bad for Republicans as well.
“The Republican Party would be the loser in a shutdown” – the first problem – “and it would be the dramatic loser in a default,” the second problem, he said. “It’s sort of like that like from Man of la Mancha where Sancho Panza says ‘Where the rock hits the jar [or] the jar hits the rock, the jar loses.’ And in this case the jar is the Republican Party.”