Right on Time, a Debt Ceiling Fight
Terry H. Schwadron
July 30, 2021
In the three-ring circus that is our government, off to the side, Republicans are forcing a traditional, if tedious attack on federal spending once again, by threatening a refusal to raise the national debt ceiling anytime soon.
Even as Washington celebrates a bipartisan win for infrastructure, another policy tidal wave is about to hit. This weekend, the Congress disbands for an August break — though it could have a special session just for the infrastructure bill — and it is possible, but apparently unknown, just when the United States will run short on its cash commitments to pay bills. So, the traditionally responsible thing to do is to acknowledge the federal pay schedule anniversary with a vote to continue spending in advance of collecting tax.
This year, of course, Joe Biden, a Democrat, is in the White House, and as Washington Post columnist Cathleen Rampell notes, “Which means, right on schedule, Republicans are again trying to take the economy hostage — by refusing to raise the U.S. debt limit.” Of course, Congress can simply say kick it all till December.
Now this debt ceiling, which is both astronomical in size and backwards-looking, is to cover the spending already done by this government — in this case still to cover debts incurred by The Former Guy and his Republican majority vote to cut taxes for wealthy and corporate taxpayers while continuing to increase annual spending for military and the Wall, among other things, as well as spending on covid aid programs.
But that isn’t stopping the ever-solemn Republican leaders in the Senate from banging away at Biden’s current projected spending bills as hugely profligate, dangerous to future generations, and, of course, “socialist” for wanting to address broken roads and airports and broken child-care, health and climate challenges. At the same time, Republican negotiators for the bipartisan portion of a huge infrastructure package say they are satisfied with the highway, pipeline, and communications projects in a trillion-dollar-bill that isn’t written and how to pay for it — even as they bang away at Biden for continuing (temporary?) high prices.
Things are a little confusing on understanding the opposition. It’s almost, er, as if they are speaking through masks — which they refuse to wear.
But, for sure, we are seeing renewal of the ever-present debate of blame for ruining future economies without addressing the current one. As TheHill.com puts it, “Senate Republicans plan to demand big spending reforms in exchange for their support of legislation to raise the nation’s debt ceiling, seeking leverage to rein in President Biden’s plan to pump trillions of dollars into the economy.”
To us cynics, the important thing here is to look righteous politically, of course, not to actually protect the credit and economy of the country.
Death, Taxes and Debt Ceilings
The last time we went through this extended dance in 2011, Barack Obama was in the White House, and a debt limit crisis went to the brink only to be resolved as financial markets started crashing. In more recent years, we just postponed the issue.
Treasury Secretary Janet Yellen has warned that the debt limit will likely have to be raised by the end of September and urged Congress to do so under regular order, which means finding at least 10 Republican votes to support it in the Senate. To do so, of course, Republicans will seek to extract a price in spending cuts and commitments to curb Social Security and Medicare spending growth, despite a growing population of aging citizens.
They don’t want to vote for anything that could give them some shared responsibility for the nation’s $29 trillion debt.
Democrats have not announced a plan other than insisting on passing their own spending bills by themselves through “reconciliation” rules, and trashing Republican desires to quash Social Security spending. Senate Majority Leader Chuck Schumer, D-NY, called Republicans “shameless, cynical and totally political” and noted Democrats voted three times during the Trump administration to “do the responsible thing” and raise the debt limit without strings attached.
Sen. Rob Portman, R-Ohio, actually has a bill, that would prevent future government shutdowns by creating an automatic continuing resolution to keep federal departments and agencies operating if Congress can’t agree on spending bills. But Republicans want to pair it with bipartisan efforts to curb future spending on Social Security, Medicare and the Highway Trust Fund.
Instead, we once again will hurtle towards another financial rocky shore.
Politics By Any Name
A debt-ceiling increase does not authorize new spending. It just raises the cap on how much the government can borrow to pay off bills. Since Congress spends more than it collects in revenue, it must allow the government to borrow money to make up the difference. If Treasury can’t borrow, on the other hand, lots of bad stuff happens to the country’s reputation, its ability to borrow money internationally, and to its financial markets.
Congress can either raise or suspend the federal borrowing limit.
Since actual partisan politics are never far from sight, you could view this mini-crisis as a fight over whether Republicans take any responsibility for having increased national debt over the last five years. That would blunt the expected attacks on Democrats during next year’s elections.
More to the point, Republicans seek leverage over the debt ceiling as a better opportunity to rein in some of Biden’s spending agenda.
The debt limit technically expires at the end of July, but Treasury officials can buy some more time by employing “extraordinary measures” to keep paying the government’s bills and avoid a default on U.S. debt.
Good luck to us.
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