My Obligatory Rant About the Debt Ceiling

Okay–I’m sure that readers of this blog are well aware of the current threat by the usual suspects to hold the debt limit hostage in order to get concessions on spending from the administration and the Democrats in Congress.

I’m also sure that most of those readers understand what the debt limit actually is–unlike the intended targets of the crazies’ messaging.  America’s debt ceiling does not authorize spending–it authorizes government to borrow funds as necessary to pay for spending that Congress has already authorized. (That’s why the GOP obediently voted to raise it during the Trump administration–even though the Trump tax cuts significantly increased the deficit and thus the amount to be borrowed.)

Here’s an analogy: you went shopping and maxed out your credit card. The bill from the credit card company comes due, and your spouse says “We aren’t paying it until you agree to [whatever].” You either accede to the whatever, or destroy your credit rating, find yourself unwelcome in the places you shop, and incur higher interest rates in the few places that still accept your business.

In 2011, when Republicans last played this game, the delay in raising the limit caused a  downgrade of U.S. Treasury debt, raising government borrowing costs by $18.9 billion over ten years.

If the GOP’s  current game of chicken succeeds–if America fails to pay the bills Congress has previously racked up–the country (and globe) would descend into recession, Social Security and Medicare payments would stop, federal workers, soldiers and defense contractors wouldn’t be paid… And you could kiss your tax refund goodby.

The U.S. is one of only two countries requiring a separate vote to raise the debt limit–most countries understand that a vote to spend X on program Y implicitly authorizes payment even if funds need to be borrowed. For many years, rational lawmakers in both parties routinely raised the limit.

Since “rational” no longer describes most GOP lawmakers, what should the administration do? I’ll let Paul Krugman answer that question.

Krugman  warns that “it’s not even clear that the Biden administration could surrender if it wanted to.”

The current crop of House Republicans makes the Tea Party, which (alas) used the debt limit to blackmail President Barack Obama, look reasonable. Today’s G.O.P. doesn’t even seem to have a coherent set of demands; a significant number of caucus members may well want a crisis, preferring to “watch the world burn” under a Democratic administration.

If surrender isn’t an option, what is?

Democrats could seek a “discharge petition” to force a vote on raising the debt limit despite opposition from G.O.P. leaders. This would both take time and require support from a handful of sane Republican House members. But it’s surely worth trying.

Second, it’s probably possible to use financial engineering to bypass the debt limit. The most famous proposal calls for minting a platinum coin with a face value of, say, $1 trillion, depositing that coin with the Federal Reserve and spending out of the bank account thus created. Believe it or not, this would almost certainly be legal.

Another option would involve raising money by issuing “premium bonds” when existing debts come due — bonds whose face value is the same as that of the bonds they replace, so that they don’t officially increase the debt, but offer high interest rates, so they sell for much more than their notional value.

Krugman also points to language in the 14th Amendment providing that “the validity of public debt shall not be questioned,” and suggests that language might be construed as authorizing the government to ignore the debt ceiling rather than defaulting on payments.

Which option should Democrats pursue? I’d say all of them. Above all, this is no time for officials to worry about seeming silly or undignified. The Biden administration is facing the threat of economic terrorism — that sounds extreme, but it’s basically what creating an artificial debt crisis amounts to. And it should do whatever it takes to face down that threat.

So–what now? The Treasury department is ramping up what it calls “extraordinary measures” to avoid default, but without a resolution, the country will stop being able to pay its bills sometime around June 5th.

Even if the administration was willing to “negotiate,”  Republicans cannot seem to agree on what it is they want. In yet another demonstration of their lack of discipline (and in many cases, sanity), several on the far Right are insisting on cuts to Social Security and Medicare, while others are focused on cutting the Defense budget. 

And what, you might ask, about the “moderate” members of the GOP? That’s easy: there aren’t any. Bret Stephens was right-– today’s GOP consists only of reptiles and invertebrates.

Stay tuned….

14 thoughts on “My Obligatory Rant About the Debt Ceiling

  1. Having so many crazy people in our government is very scary. Things could go so badly for us all. Good luck and best wishes to the sane folks trying to make it all function. Fingers crossed.

  2. This kind of puts Republicans in the same boat as Putin when he warns he’ll go nuclear. Not a good look.

    IMO Biden should cut to the chase. Force Republicans hand by refusing to abide by their rules. In other words, just keep writing those checks and force House Republicans to take them to court. If the court rules in Biden’s favor then that’s the end of the Debt Ceiling. If the court rules against Biden, they’ll be ruling against the full faith and credit of the US and the SC’s credibility as the cataclysm that ensues will be on their heads. Likely they won’t chance that. Might also be good for 2024.

  3. Sheila, you really need to change this platform. There is no good way to followup on what any responder says, including yourself. Mostly this is a one-way discussion.

    Have you considered moving from your current situation to one like Robert Reich and Jeff Legum occupy? Would be nice.

  4. Hope everyone has read The Deficit Myth by Stephanie Kelton. Robert Reich makes some good points about the current debate this morning.. If we lose the full faith and credit that backs our currency, we are in big trouble as a nation.

  5. Republicans haven’t cared about fiscal responsibility since Reagan kicked off his “supply side” Ponzi scheme. In addition to the described measures by the Administration, the rest of us should build support for removing from office any representative using the debt ceiling as blackmail to get spending changes they can’t get through legislation and the appropriations process. On what grounds? Violating their oath of office by flagrantly violating Article 4 of the 24th Amendment. The next Democratically controlled Congress can then fix the problem by removing the debt ceiling.

  6. Terry at 6:51; your first sentence says it all. The country is being held hostage by the minority in government and in the nation, namely the Freedom Caucus. The Republicans fully understand their responsibilities in House and Senate but there is no one to force them to carry out those responsibilities, just as McConnell has refused to hold hearings which are required by the Constitution. We are in a CONSTITUTIONAL CRISIS!!@

    Putin is holding the U.S. and our Allies and EU hostage with his nuclear threats as he demolishes the Ukrainian people and their country. His nuclear weapons and those of North Korea are not aimed at Ukraine; the U.S. is in their cross hairs. We are at war with Russia and Putin’s allies are the minority but we dare not put our boots on the ground in Ukraine to prevent nuclear war. We are also in a GLOBAL CRISIS!!!

    McCarthy is in his own hostage situation; the Debt Ceiling is simply the first battle with the Freedom Caucus controlling him. One concession he was force to agree to to get that gavel in his hot little hand is that, under the new House Rules, the Speaker can easily be removed and replaced. Knowing McCarthy, we know that is his primary concern is not cutting Social Security, Medicare, Health Care, Climate Change, increasing minimum wage, education or even cutting taxes on the wealthy. His primary concern is that age-old CYA; Cover Your Ass, and his ass is in the hot seat. That is the foundation of the GOP which is somewhat in a hostage situation of it’s own due to Trump and his allies. The cries of needing a third party are being renewed; that would create a new set of problems before we have resolved any of the old or current problems. We are in a POLITICAL CRISIS!!!

    And we are all up to our ass in alligators!!!

  7. Patrick,

    Well said. But the root of all these issues lies with the lack of any real intelligence among Republicans. Lauren Boebert wiped the drool off her lips long enough to rant about cutting funding for Ukraine’s war against Russia’s invasion. She’s probably a Russian asset. Then there’s McCarthy’s pledge to never leave MTG. One can only wonder where that comes from. I will not venture into the sordid world in which those two idiots dwell.

    So, yes, making the Debt Ceiling a hostage issue reflects how little Republicans have to offer the American people in the way of governance. And, Patrick, you’re right about the Reagan/Friedman Ponzi scheme that has destroyed so many thriving economies for the sake of the 1%.

    Add to that the spate of shootings and the fact that Americans gun down almost 100 people per day, leads me to think that humans don’t really deserve this planet.

  8. For the future I propose two things: 1) Permanent suspension of the “debt ceiling.” 2) Penalties under law for violations of the constitution that amount to a dereliction of duty.

    Under proposal number 2, penalties should be loss of the perpetrator’s position in the Congress or other office and loss of ability to hold future public office.

  9. At the federal level, at least, the Republican Party is engaged in an orgy of self destruction and have passed the point of no return. The faster they can complete that process, the better off the rest of us will be. They have had multiple opportunities to turn around but less than a hand full of them have chosen to do so. A new party must rise to replace them. Whatever that new party calls itself (even if it sticks with Republican), it will have to have new leaders and a new roadmap to follow. Pass the peanuts. Popcorn hurts my gums.

  10. Long before the crazies took over the Republican Party I have been predicting that party’s demise in its return to the Whigdom from which it arose in 1854, but I didn’t think its end would come the way it is, i.e., a total lack of concern for governing. I thought that party would disappear by reason of a lack of governing rather than no governing at all. I was wrong. Has anybody heard any of the crazies discuss their party’s platform or set of governing principles? No, because they don’t have either and thus fail to meet the definition of a political party.

    I understand that any political party seeks the power at the polls necessary for its members to make real the plans and policies they campaigned on, but when, as here, a party has no platform or set of governing principles and seeks power via 1/6, lies, propaganda, sedition etc., those are not the acts of a political party but rather those of its captors.

    If my logic hereinbefore set forth is sound and the captors own the remnants of the once proud party of Eisenhower, then my flawed prediction has nevertheless come true. The Republican Party, standing for nothing, does not now exist other than in name and memory. We are dealing with those who have destroyed it, i.e., its captors.

  11. I like Sharon’s thinking, especially about rule #2!
    These Freedom caucus fools are what the Tea Party has degenerated into, and
    McCarthy was part of that crew, I believe.
    These almost humans have nothing to bring to the table other than their venom!

  12. We’ve evolved too slowly.
    I hope the geneticists can fix that.
    Even this blog can’t evolve to a better format.
    QED

  13. Peggy at 9:49 and Mitch D; Google ‘Congressional Research Service” and read section “Recall of Legislators and the removal of members from Office”. There is probably a way found in the legal jargon to meet Peggy’s 9:49 proposal. I couldn’t get it to copy and paste. There are certainly members who fit the criminal possibility of removal from office, the problem appears to be the percentage of members required for removal from office as it is problematic all the way up to the Supreme Court.

  14. JoAnn, all I have to do is sit back and see you promote the same ideas as I. Well done and Amen.

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