January 19 is Confederate Heroes Day in Alabama, Mississippi, Texas, Louisiana, and Florida where the population celebrates the insurrectionists who attempt to separate seditionist states from the United States. It’s also “D Day” or debt ceiling day, the date marking when the U.S. can no longer borrow money for its debts by issuing bonds. Treasury Secretary Janet Yellen said that the administration will be forced to take “extraordinary measures” to keep the U.S. government from breaching its debt limit and going into default within five or six months.
Yellen said officials will now change some federal investments through technical maneuvers to buy time for congressional members who need to raise the debt limit, $31.4 trillion, in order to save the country’s economy. One measure is suspending new investments in the new investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund until June 5, 2023, allowing the government to pay its other bills until then.
Although the U.S. has never defaulted on the debt and increased the ceiling 78 times, extremist Republicans from the Tea Party did come close to default in 2011. Republicans already have instructions for the Treasury Department if Biden doesn’t agree with their wishes, listing what debts will and won’t be paid. These are part of the agreement Speaker Kevin McCarthy (R-CA) made with the hard-right House Freedom Caucus to get their votes for the speakership. Some Republicans also consider lowering Medicare and Social Security benefits, possibly part of McCarthy’s deal.
Republicans raised the debt limit three times for then-Dictator Donald Trump (DDT) who increased the debt by $7.8 trillion with GOP approval, the third-largest in history with only George W. Bush and Abraham Lincoln having larger increases while they paid for wars. The GOP also vastly lowered taxes for the wealthy and big business, $2 trillion loss of the $7.8 trillion addition to the debt limit. Now the current House GOP leaders plan to hold the country hostage until Democrats agree to lower spending for the safety net. Jacob Bogage explained:
“Federally backed debt is the backbone of domestic and global markets. A failure to make good on U.S. borrowing could set off panic on Wall Street and spark millions of job losses.”
If McCarthy sticks to the far-right Freedom Caucus policies, the situation could end up in court in a constitutional crisis. The U.S. Constitution states, “The validity of the public debt of the United States … shall not be questioned.” Some experts argue that the U.S. cannot default on debts already created and Congress cannot establish a debt limit. In an extreme solution, Biden could tell the U.S. Mint to create a $1 trillion platinum coin and deposit it into the Federal Reserve, making credit payments from this sum. The idea was considered during the 1921 debt ceiling but decided against it. Yellow called the idea a “gimmick.”
Republicans insist that Biden negotiate with them so they can get what they want; Biden refuses. DDT, responsible for almost one-fourth of the national debt, told Republicans to play “tough” and not budge on their demands. His reasoning is to reverse “almost everything” that Biden and the Democrats have accomplished—”a beautiful and joyous thing.”
Republicans cling to a false metaphor to justify their behavior, and McCarthy has repeated it for at least three months:
“If you gave your child a credit card and they kept hitting the limit, you wouldn’t just keep increasing it. You would sit down with them to identify where they are overspending and where they can change their behavior. It’s time for the federal government to do the same thing.”
His faulty rhetoric has caught on; House Majority Leader Steve Scalise (R-LA) follows McCarthy’s lead. Yet at no time during DDT’s four years in the White House did any Republican mention credit cards. Or not raising the debt ceiling. Not increasing a credit card limit doesn’t mean that people can just default on current debts. Steve Benen wrote:
“The family that received the bill doesn’t get to tell the credit card company, ‘We’ll refuse to pay this bill unless you meet our demands and pay us a ransom.’”
In addition, not raising the debt limit doesn’t stop Republicans from introducing legislation to cut spending they don’t like. Republicans’ goal of not raising the debt limit largely occurs when the president is a Democrat; under a GOP president, the GOP has almost no problem with spending.
Robert Reich wrote about his involvement in raising the debt ceiling 28 years ago when Republicans refused to increase it until Bill Clinton agreed to sweeping spending cuts, welfare overhaul, restrictions on Medicare, and a balanced budget within seven years. Clinton agreed with his advisers to not negotiate, to not permit Republicans to hold the economy hostage. He called it “economic blackmail.” The result was a government shutdown, causing Republicans to suffer in the next midterm elections, and the downgrading of U.S. Treasury bonds rating. In 2011 and 2013, Barack Obama negotiated, but an ensuing government shutdown again hurt the Republicans, and the negotiated agreement hurt the economy.
In all these situations, Republicans offered to prioritize which bills to pay, claiming no technical default if they followed this procedure. The idea didn’t move forward because of the danger to stock markets’ plunging and a potential tanking economy. Yet Republicans pay no attention to history. The current agreement is to prioritize (1) first, debt service payments; (2) Social Security, Medicare and veterans benefits; and (3) military funding. Nothing else would be paid, including food safety inspections, border control, air traffic control, Medicaid, etc. Rep. Rick Allen (R-GA) justifies raising the Social Security retirement age to slash benefits because people tell him they “actually want to work longer.” He also claims his strategy isn’t cutting Social Security although recipients will get less money during their old age.
Sen. Joe Manchin (D-WV) has joined the GOP in cutting Social Security and Medicare. With Sen. Mitt Romney (R-UT), he has created legislation modeled after the Simpson-Bowles Commission that recommended deep cuts to Social Security in 2011. On Fox, Manchin said that this legislation could get a debt ceiling agreement from House Republicans and “really” thinks Biden will change his mind to negotiate with the GOP.
Freedom Caucus chair Rep. Scott Perry (R-PA), who tried to overturn the government on January 6, 2021, expressed confusion with ABC News’ George Stephanopoulos about why Biden said he wouldn’t negotiate. More moderate Rep. Don Bacon (R-NE) said Biden “has to negotiate” and “can’t say he refuses to negotiate.” He claimed that voters gave the GOP a “mission” to cut spending although the House, which vastly underperformed in the most recent election, has a slim majority of five members at this time. The Senate also lost a Republican.
Bacon also said that the government “just does not work” if “parties say, ‘My way or the highway’”—exactly what the Republicans are saying. Instead of cooperation, the GOP demands a ransom in a hostage situation. Imagine if, in 2019, House Speaker Nancy Pelosi (D-CA) and her team told Republicans that the Democrats would crash the economy if the GOP wouldn’t drastically expand Affordable Care Act benefits. What would be the GOP response if a moderate House Democrat goes on television, explains that Democrats were elected to increase health care benefits (their “mission”), and says that “Donald Trump has to also negotiate. He can’t say he refuses to negotiate.” Would Bacon agree?
The conservative Hill listed five serious issues with not increasing the debt ceiling:
Rising recession risks: If Republicans block the ability to borrow money to fund stimulus, a recession from an economic showdown would be steep.
Global financial crisis: If the U.S. defaults on its debt for the first time and doesn’t stay solvent, the U.S. dollar and Treasury bonds would no longer be considered safe, and banks, financial firms, business and sovereign nations would lose backing from trillions of U.S. dollars and Treasury bonds.
Loss of crucial federal benefits for people in the U.S.: Millions of people would no longer be able to spend hundreds of billions of dollars for food, medical care, and basic necessities, crashing the economy in a domino effect with job losses, homelessness, hunger, closing small businesses, etc.
Higher interest rates: Anything making the government look less trusty increases rates by lenders both domestic and foreign—home mortgages, credit card debt, etc.
Falling public trust: Polling with high disapproval of Congress will only get worse for the legislative body.
Conservative Charlie Sykes writes in his Bulwark that defaulting on debt obligations isn’t “conservative”—it’s reckless and irresponsible. He pointed out that the Freedom Caucus has taken “the economy hostage” with brinkmanship “a euphemism for this fiscal game of chicken,” and default would cause the Dow to plunge by thousands of points per day.”
The best solution for the national debt is to raise revenue—replacing the taxes for the wealthy and big business that were already about 30 percent of what they were in the 1950s before they were slashed in 2017. Republicans will never agree: they’d rather have a fiscal insurrection.
Nel's New Day 