Will Congress be playing with the economy again?
The summer of 2011 was an uncomfortable time in Washington.
Congress, as it had routinely done many, many, many times before, had to raise the debt ceiling, with the law placing a cap on how much the government can borrow to meet its obligations. Raising the debt ceiling is not a complicated piece of legislation; it requires changing one number to a higher number in a one-sentence calculation. But the Republican majority in the House of Representatives, swept away by the tea party wave the previous year, decided to put conditions on the debt ceiling this time – and President Obama got involved with them.
Had no agreement been reached, the Treasury Department would have failed to meet its obligations and the world economy would have plunged into chaos. In the end, however, the two sides agreed to cut spending over ten years. (Most of these cuts never materialized.) Everyone involved lost years of their lives due to the stress of negotiation and brinkmanship, and everyone involved came off worse politically. It sucked.
So who’s ready to do it all over again?
In fact, the debt limit has already been reached. As of July 31, the Treasury Department has been using its series of “extraordinary measures” to pay the bills, which it can do until sometime this fall. What is soon.
Republicans cared little about the debt ceiling as they ran President Trump’s administration and burned cash. It was routinely increased or suspended under broader government finance bill agreements. Since the last suspension in 2019, the government has amassed trillions of trillions in debt as a result of its COVID relief programs. With the notable exception of the US $ 1.9 trillion rescue plan, which was passed earlier this year, all others have been bipartisan negotiated and passed. Everyone agreed on that.
But now that they’re out of power, Republicans are telling Democrats that they will no longer agree to this. They refuse to even help the Democrats raise the debt ceiling, especially as the Democrats put a new $ 3.5 trillion spending bill on the table.
“Let me be very clear,” Senate minority leader Mitch McConnell said this week. “If [Democrats] do not need or want our input, they will not get our help. You will not get our help in raising the debt ceiling that these ruthless plans require. “
Could it be clearer?
“I couldn’t be clearer,” said McConnell. “You have the ability. They control the White House, they control the house, they control the Senate. They can raise the debt ceiling, and if it is raised, they will. “
McConnell is right that the Democrats have the option to raise the debt ceiling themselves. The debt ceiling hike is allowed under Atonement, the filibuster-free process the Democrats are planning to use to get their $ 3.5 trillion bill off. McConnell and other Republicans, even those who occasionally help the trusting government process, tell Democrats to just stick raising the debt ceiling on this package.
“They are the ones who want to spend $ 3.5 trillion,” Utah Senator Mitt Romney told reporters this week. “They are the ones who massively increase the debt. Raise the debt limit if they will, but you can do it yourself. To say we have to do it threatens our economy and is just irresponsible. “
You may be wondering, why is Mitch McConnell giving all this advice to the Democrats? Just enter it in your reconciliation bill and get it over with? It is not in McConnell’s nature to give useful advice to the Democratic Party. However, McConnell wants the Democrats to have a billions of dollars hike to the debt ceiling so that Republicans can use it in attack ads during the 2022 campaign.
There is a debate of its own about whether or not voters are still taking care of the debt. The members seem to think they are. And so, according to Politico coverage this week, the Democrats refused to raise the debt ceiling alone while they were drafting their reconciliation law. Instead, they prefer to tie it in with the next government funding proposal due in late September. Democrats feel they have held the hands of Republicans in lifting the debt ceiling under Trump.
“The rules that existed under Donald Trump that we would not upset the full faith and recognition of the United States of America were appropriate and prudent,” Virginia Senator Mark Warner told reporters this week. “To create a false crisis … at this moment when so much is happening in the world, so much is happening in this country, to get out of COVID and deal with the variant, would be the epitome of irresponsibility.”
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Oregon’s Senator Ron Wyden, chairman of the Senate Finance Committee, bluntly said the Democrats would not go along with Republican demands like they did this summer of hell 2011.
“Mitch McConnell will not be able to do to President Biden what Republicans did to President Obama,” Wyden told reporters.
Democrats believe Republicans will give in as they would be held responsible for the twin crises of debt default and government shutdown by tossing a wrench in regular government business. Republicans, meanwhile, believe they have the leverage since the Democrats are the party that controls the government and has ultimate responsibility.
So who is right? Not clear. Maybe it’s just a bunch of puffing and puffing on both sides, and a face-saving arrangement is made at the last minute. But to bet that Mitch McConnell, who doesn’t usually make big decisions on the fly, chose to bluff on one of the most momentous deals – that would be pretty risky for Democrats if they had another option.