The debt ceiling standoff
Joe Biden can't end it with the stroke of a pen
Yesterday, the House narrowly passed a bill that would raise the debt ceiling and avert a default by the U.S. on its obligations. However, the House bill, with its spending limits, has no chance of becoming law.
As things stand, therefore, we have a standoff. The Republican caucus wants to use fear of a default to reduce spending at a time when the U.S. debt has reached a once unthinkable level — $31 trillion. And the desire/need to show hardliners that the caucus and its leadership are made of sterner stuff than previous incarnations militates against compromising much.
Meanwhile, Democrats see the possibility of a win-win if they don’t compromise. Either they get the ceiling raised without cutting spending or Republicans get blamed for the economic consequences of a default, shifting responsibility for a poor economy from Joe Biden to the GOP. As always, the mainstream media takes the side of the Democrats.
In this op-ed, Alan Blinder places blame for the standoff on the GOP and proposes that Joe Biden emerge a hero by raising the debt ceiling on his own. My friend Jim Dueholm, a frequent contributor of excellent comments on this blog, responds to Blinder’s piece as follows:
Alan Blinder blames past and present debt limit crises on Republicans and claims a debt default would be unconstitutional. He's wrong on both counts, and he ignores the uncharted straits we're in.
Referring to three recent debt limit standoffs between president and Congress, Mr. Blinder says "in each case congressional Republicans used the threat of default to try to bend a Democratic president to their will." That's one way of looking at it. Another way is that "in each case a Democratic president used the threat of default to try to bend a Republican Congress to his will."
Mr. Blinder doubles down on his error when he says today's House Republicans are using the threat of default to bend President Biden to their will when it's just as true President Biden is using the threat of default to bend House Republicans to his will. The two need to tango, and they've always done so in the past.
Not to worry about the debt limit, Mr. Blinder says, because the Constitution gives the president power to pay all debts without leave of Congress. He points to the 14th Amendment provision that "the validity of the public debt of the United States shall not be questioned." But an admitted default in payment of a debt does not question its validity; quite the contrary.
Mr. Blinder ignores the magnitude of the debt. The pandemic and President Biden's inflationary spending have created a debt level that's like nothing we've seen before in peace time, and the interest rate hike on U.S. securities made to fight the Biden inflation makes things worse.
As President Lincoln said in facing the challenges of the Civil War, "as our case is new, we must think and act anew." The current debt ceiling standoff gives us a chance to tackle or at least slow down a debt runner that nears a cataclysmic end zone.
Unfortunately, Joe Biden and his fellow Democrats would rather not tackle that runner. They would rather tackle Republicans.
They don’t care about the debt and they like the prospect of that win-win.
"fear of a default"
In March 2023 the US government had revenues of $313B. In March 2023 the interest on the US debt was $67B.
The only fear of a default is from those who do understand the issue. There is plenty of revenue to service the debt. There is however, not enough money to service the debt and pay for wasteful programs though.
Paul: I am so sick and tired of the conventional coverage of these debt ceiling standoffs, and fatalistic attitude of many republicans that the public will blame us if we don't cave to democrat spending.
They write about it like it's nothing more than a political game of pin-the-tail-on-the-donkey.
And in this cycle they act like the current US practice of spending has no consequences, when we're regressing into the era of stagflation in the 1970s.
"The Debt" is not just a number. It has real effects on the lives of Americans. Republicans have to link the reality to the issue.
Deal with it: Continued spending means continue money printing, which means continued inflation at rates above 5%, which means continue interest rate increases by the Fed, which means that fewer people can borrow, buy homes, create jobs, pay their debts.
I applaud McCarthy for the effort to link these issues, where past republican leaders have typically hidden under the desk and caved early.
McCarthy's down-to-earth explanation of the linkage between spending caps and debt ceiling increases, using the example of a spendthrift teenager, was the most articulate and practical explanation I've heard from any republican leader, ever.
What has the senior republican leader in Congress, Mush McConnell - Mr. Fiscal Conservative Himself! - been doing to mount a fight in the Senate, besides offering tepid murmurs?