Let the debt ceiling fight begin

We are now told that the so-called “X-date” (when the federal government hits the current debt limit) is fast approaching, potentially much sooner than previously anticipated. Leading economists can’t seem to agree on precisely when this will happen, with some saying “in the next few weeks” and other, more optimistic prognosticators putting the date at “some time this summer.” But either way, the date is clearly coming. The Fed can implement what are described as “extraordinary measures” (bookkeeping tricks) to push the deadline back a bit, but that will only hold for so long. This leaves us with two obvious questions to address. First, why is it happening so much sooner than expected? And second, what’s to be done about it?

A recent Associated Press interview with Shai Akabas of the Bipartisan Policy Center offers some insight into the first question. And yet again, we learn that the latest crisis of the Biden administration is a largely self-inflicted wound: 

Once the government bumps up against the cap — it could happen any time in the next few weeks or longer — the Treasury Department will be unable to issue new debt without congressional action…

Akabas told The Associated Press the X-date has “likely moved forward” from this year’s third quarter due to rising interest rates and a pause on student loan repayments recently extended by the Biden administration. A more precise date will become available when the Congressional Budget Office updates its outlook later this month.

Huh. So we’re running out of money faster than anticipated because of the White House’s insistence on either canceling massive amounts of student debt or refusing to collect any payments on it. Those losses are combined with the far more expensive interest rates we must pay while servicing the already staggering, extant national debt. Who could possibly have seen this coming? Well, as it turns out, many people foresaw this, including James Freeman at the Wall Street Journal:

So the government will run out of funds sooner than expected because of Mr. Biden’s determination to make taxpayers rather than borrowers carry the burden of student debt and because of rising interest rates resulting from the inflation that the president’s spending has clearly exacerbated. Given that Mr. Biden’s fingerprints are all over the new debt deadline—not to mention much of the spending that created the $31 trillion monster—it would be flatly irresponsible of him to reject a negotiation with the Republican House over fiscal restraints. Haven’t various media outlets recently assured us that he’s determined to embrace bipartisanship as a model for governing?

Thus far, Joe Biden has stuck his fingers in his ears and insisted that Congress must send him a “clean” bill to simply increase the debt ceiling yet again. It’s completely predictable that if Kevin McCarthy and the new House GOP Majority don’t do that, the corporate media outlets will cry out in unison (almost as if they are reading from a script) that the Republicans are looking to shut down the government, crash the economy, end Social Security, and blah, blah, blah, blah. You know the tune by heart at this point.

Biden’s position is ludicrous and if McCarthy caves to this demand he will burn up a significant portion of the good will he’s generated among conservatives with his early actions as Speaker. The Republicans won a majority in the house last November (narrow though it may be) and with it, they won the right to determine a portion of the agenda. Put more simply, the voters of the nation handed them leverage.

I’m not here to argue that there shouldn’t be a deal and the GOP should simply stonewall the situation until we breach the debt ceiling. Sad though it may be to say, the horrific consequences of defaulting will arrive much more rapidly than the horrific consequences of running the national debt up to the point where the seemingly inevitable death spiral of debt reaches its terminal destination. So a deal will need to be reached.

The situation is sufficiently bleak that we can’t even reasonably expect a modest decrease in the debt this year. We may not even be able to achieve a modest decrease in spending without causing a domino effect of other problems downstream. But there are workable demands that McCarthy can make of Joe Biden and Chuck Schumer and he should refuse to pass a debt ceiling increase unless they meet him in the middle.

There should be a bill that (at a minimum) caps spending at its current levels through the end of the year. There should be a bipartisan agreement to conduct a full audit of all the money that has been frittered away while the needs of American citizens have gone unmet. These should include all of the COVID relief money that was obviously stolen by fraudsters and every penny of the more than $100 billion that has been poured down the black hole of Ukraine. To avoid further costs being incurred by having to deal with the human flood of millions of illegal migrants crossing our border, Biden and Schumer need to agree to pass legislation mandating a rapid completion of the border wall and significant expansions in both border control enforcement personnel and our immigration courts.

If the Democrats are unwilling to put even these modest concessions on the table, McCarthy should walk away. When the MSM inevitably blames the Republicans for the impending debt ceiling crisis and all it entails, let them. But communicate loudly and clearly to the American public that an easy and relatively inexpensive path to avoid this debacle was on the table all along and it was Joe Biden and Chuck Schumer who refused to “take yes for an answer.”

Post a Comment

Previous Post Next Post