The Debt Ceiling

The debt ceiling, which we are expected to hit in the middle of this month, is yet another one of these absurdist, surrealist features of American government. It essentially requires the Congress to authorize the US Treasury to actually pay for what the Congress has already authorized the federal government to spend. While comparisons between a household budget and the federal government are for the most part misleading, the debt ceiling is like having the household vote every month on whether to actually pay the electricity, heat, and water bills in addition to whatever else may have been put on a credit card. If the Congress refuses to raise the debt ceiling, the US will start defaulting on its obligations and will soon start missing interest payments on its debt obligations. If that should happen, we would see an immediate financial and economic crisis that would decimate not just the US economy but the world economy in general.

Because the Republican party is a nihilistic, racist, anti-democratic death cult, it is currently filibustering Democratic attempts to raise the debt ceiling in the Senate. Mitch McConnell has openly declared that Democrats must raise the debt ceiling on their own, which the Democrats would do if the Republicans would actually allow a vote on the floor where a majority could pass the bill. But the US Senate currently does not work by majority rule and, as long as Republicans stick together, their filibuster cannot be broken. So-called “moderate” Mitt Romney stated yesterday, “We’re [Republicans] not voting in any way to help raise the debt ceiling. As a group we are all together”.

The Republican position is clear: It is up to Democrats alone to prevent a worldwide recession; but we will not allow the Democrats to act to prevent that. Despite yet another misleading article from the New York Times declaring that McConnell has no demands in return for allowing a debt ceiling vote, McConnell’s demand is also clear: for Democrats to abandon Build Back Better (BBB) and Biden’s legislative agenda. McConnell wants to force Democrats to waste important floor time and a second bite at reconciliation, where Republicans can put up all sorts of poison pill amendments to run on in 2022, in an effort to further delay, weaken, and kill the BBB reconciliation bill. GOP Senator Susan Collins let the mask slip when she said, “some Republicans would vote to raise the debt limit if they knew the Democrats were going to abandon the $3.5 trillion package”. And if you believe Republican Senator Roy Blunt, which you shouldn’t, there are around “44 or 45” Republican votes to lift the filibuster for the debt ceiling but that the remaining five or six will not give unanimous consent to move forward, essentially leaving the filibuster in place unless those ten of those supposed “44 or 45” vote to break the filibuster. Of course, according to Blunt, those “44 or 45” also want to take that vote in secret in order to hide from their own constituents. All this points again to the absurdity and nihilism of the Republican position on the debt ceiling, the concept of the debt ceiling itself, and the very existence of the filibuster.

There seems to be a common misconception that both parties play extortionate games with the debt ceiling. That is simply untrue. Democrats have never prevented a vote to raise the debt ceiling to come to the floor of either house of Congress. In fact, in 2011 when Republicans controlled the House, they needed and got Democratic votes to raise the debt ceiling, with a number of Republicans stating a preference for the US to default in order to strangle the Obama presidency. In fact, that horrific 2011 agreement, over the objections of progressives, also cut domestic spending drastically, leaving the GOP with the belief that extortion over the debt ceiling can be a winning gamble that still haunts us today.

Some economists have offered potential ways to avoid the debt ceiling that would not involve Congress. One option is to simply have the Treasury Department ignore the debt ceiling entirely, relying on the 14th Amendment’s section declaring “the validity of the public debt of the United States, authorized by law … shall not be questioned”. Probably the biggest issue with this approach is that it would immediately throw the issue to the courts and we could find ourselves in technical default when some obscure right-wing wacko district judge in the 5th Circuit declares that ignoring the debt ceiling is unconstitutional. Another approach is the so-called “platinum coin”. The President orders the Treasury Department to mint a platinum coin of some denomination, $1 trillion or $100 trillion, and then deposit that coin at the Federal Reserve. Voila!, because of the power of fiat currency, the government now has that money to spend. This option would actually rely on the Federal Reserve accepting the platinum coin deposit, something that is not guaranteed since it involves the Fed in what is essentially fiscal policy and threatens its traditional independence. In addition, no one knows what the inflationary impact of issuing such a coin might be. But perhaps the biggest issue with either of these options is the fact that it would illustrate just how dysfunctional America has become and likely trigger a harmful downgrade to the US debt rating. As Paul Krugman notes, “First of all, using any of these gimmicks would send the signal that we’re a troubled country — but of course we are a troubled country”.

Democrats, to their credit, appear willing to stand up to the Republicans’ blackmail. Biden has consistently hit the GOP for its unconscionable stance that would lead to default. Treasury Secretary Yellen has kiboshed any of the gimmicks and recommended Congress abolish the debt ceiling. And Majority Leader Schumer won’t pursue reconciliation. It appears the Democrats will once again force the Republicans to filibuster raising the debt ceiling again later today. The Democratic plan now looks like it involves holding Republicans’ feet to the fire until the last minute and then, if the filibuster still can’t be broken, to finally change the filibuster rule for the debt ceiling in order to raise it with a simple majority vote. But even that plan is utterly pathetic, as it apparently only changes the filibuster rule for one day, simply to raise the debt ceiling. One would hope that Democrats would provide a permanent carve-out to the filibuster for the debt ceiling, or raise it to some exorbitant level that would eliminate it as an issue for decades, or, as Secretary Yellen has suggested, eliminate it entirely. Even better would be a permanent carve-out for the debt ceiling and “constitutional issues” such as voting rights as has been suggested by former Senator and conservative Democrat John Breaux. Tying those issues to raising the debt ceiling would certainly put the squeeze on Sinema and Manchin, but we all know that is not going to happen.

The debt ceiling fight is really a metaphor for the country at this moment. Republicans are willing to destroy the full faith and credit of the United States and are forcing the Democrats to act alone to prevent that. Democrats appear willing to do only the minimal amount to actually do that, suspending the filibuster for the debt ceiling for one day. The same could apply to our democracy in general. Republicans are determined to sabotage our democracy and ensure minority rule through extreme partisan gerrymandering and control of the electoral processes, and less than a handful of Democrats can not muster the will to let the majority of their own party counter those GOP actions by eliminating the filibuster and exerting the political power they have in this short window. The same could be said about gun violence and, to a lesser degree, Covid – Republicans keep on killing us another handful of Democrats prevent the majority of the party from acting.

Eventually, the Republican desire to destroy the country rather than live in a multi-racial democracy and a multi-cultural society will prevail unless strongly countered. Ryan Williams, the president of the Claremont Institute which brought us the John Eastman roadmap for the January 6th coup, recently said, “The Founders were pretty unanimous, with Washington leading the way, that the Constitution is really only fit for a Christian people…The Civil War was terrible. It should be the thing we try to avoid almost at all costs”. The most operative word in that statement is “almost”. This is now the core of the Republican party and it seems that there are still some in the Democratic party who refuse to see it.

Another disturbing note is the complete and utter silence from Wall Street and the broader business community on the debt ceiling crisis, much less criticism of the Republican position advocating default.  Perhaps this stems from a belief that the crisis will be resolved as it usually is. The danger is that they, like those handful of Democrats, underestimate just how radical the Republican party has become. It is an outlier even compared with the extreme far-right parties in Europe. But perhaps more worrying is that the American plutocrats have found democracy too cumbersome to bother with compared to just bribing public officials like they do in other countries and now basically do here in the US. For them, it is far easier to flatter and bribe Trump and get a big government contract than actually compete for the business. What they forget is that even the oligarchs in Russia have to toe the line with Putin and can become outcasts in a minute when he turns on them. Perhaps our business leaders should remember just how much market value their shares could lose with a simple Trump tweet.

The Democrats will probably resolve this current debt ceiling crisis but it should not be lost on us that the Republican filibuster preventing even a vote is yet another escalation in their war against democracy. And if the Democrats can not find a way to overcome the objections of a handful of their own members to counter these Republican attacks, then our democracy will be lost forever.