Republicans appear determined to risk defaulting on the nation’s debts in their effort to force Democrats to agree to cuts to Social Security and Medicare as well as other social spending that the right simply can’t stand.
One of the promises Kevin McCarthy made to seditionist “Freedom Caucus” Republicans to gain their support to elect him House Speaker was to hold the debt ceiling hostage.
The national debt hit the statutory debt limit of $31.4 trillion Jan. 19, Treasury Secretary Janet Yellen said, as the government began using “extraordinary measures,” moving money around government accounts to allow the government to meet its financial obligations as long as possible.
“The period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the US government months into the future,” Yellen said. “I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.”
It’s true that $31 trillion is a lot of money. But Paul Krugman noted in the New York Times that a better way to think about debt is to ask whether interest payments are a burden on the budget. In 2011 those payments were 1.47% of gross domestic product — half of what they were in the mid-1990s. In 2021 they were 1.51%. “This number will rise as existing debt is rolled over at higher interest rates, but real net interest — interest payments adjusted for inflation — is likely to remain below 1% of G.D.P for the next decade,” Krugman wrote.
But House Republicans have vowed to hold the line on the borrowing limit until President Biden agrees to steep cuts in federal spending. Biden has ruled out negotiating for a debt-limit increase, noting that the money is going to cover spending previous Congresses authorized.
The use of the “debt ceiling” by Republicans in the House to stop the administration from paying bills Republicans ran up in the preceding administration flouts the 14th Amendment to the Constitution, which states, “The validity of the public debt of the United States, authorized by law ... shall not be questioned.”
The “debt ceiling” became a thing when Congress passed the Liberty Bond Act of 1917, which gave the president budgetary discretion to sell bonds to fund US participation in World War I, while imposing control over that discretion by limiting how much debt could be incurred. It was not used as a political weapon until Republican House Speaker Newt Gingrich tried to use it in an attempt to extort budget cuts from President Bill Clinton in 1995.
In 2011, the Republican House majority nearly caused the US to default on its debt before President Obama agreed to caps on future spending increases in exchange for lifting the limit. Still, the brinksmanship resulted in a credit downgrade for Treasury bonds that raised US borrowing costs by $18.9 billion over the next 10 years, according to the Bipartisan Policy Center.
The debt increased $7.8 trillion during Donald Trump’s time in office, including Trump’s tax cuts for the wealthy and corporations, which were projected to cost $1.9 trillion over 11 years, and COVID-pandemic-related stimulus cost $3 trillion. The Congressional Budget Office projects deficits of $3.8 trillion so far under Biden.
Robert Hockett, who teaches law and public policy at Cornell University, wrote at Forbes.com Jan. 19 that President Biden and Treasury Secretary Yellen can simply ignore the debt ceiling
Since Republicans started trying to use the debt ceiling as a hostage in the 1990s, all appropriations laws have directed Congress to incur public debt to purchase and pay for everything the federal government does. “Biden and Yellen, I claim, can simply ignore the would-be hostage-taker this time, leaving the ball in their ‘court’ to haul Treasury into our Courts and then watch the Supreme Court annul it. Unless President Biden actually wants House Republicans to pretend to ‘take us to the brink,’ then – letting them thereby commit political suicide as their predecessors did back in 1995, 2011, and 2013 – he should simply announce that the ‘debt ceiling’ just ‘isn’t a thing’ and instruct Janet Yellen to disregard it.”
Since enactment of the Congressional Budget and Impoundment Control Act of 1974, Congress has had ultimate control over the federal budget process, treating as merely advisory the President’s proposed budget each year.
“That the ‘debt ceiling’ regime was never intended to apply to present circumstances, especially after 1974, of course is revealed by the fact that it wasn’t fought over by White Houses and Congress during the decades following 1917 … until opportunistic politicians beginning with Newt Gingrich in 1995 rediscovered it in the US Code and decided to try their hands at employing it for stunt-performing purposes like shutting down the government. Be that as it may, the important point right now is that both (a) the 1974 budget regime trumps the 1917 budget regime, and (b) the current budget trumps any putative ‘debt ceiling’ imposed after that budget became law.
“The President should therefore just say that the last putative ceiling was implicitly repealed by the current budget, then note while at it that this also accords with Section 4 of the 14th Amendment to the US Constitution … ratified by the former Confederate States as a condition on readmission to the Union. That provision prohibits questioning of the US national debt, which compliance with any putative ‘debt ceiling’ imposed after debts are already incurred would amount to.”
Hockett also notes, “The Republican abuse of the debt ceiling also raises Constitutional issues under the Constitution’s ‘Take Care’ Clause found in Article 2, Section 3, pursuant to which the President is required to ‘take care that the Laws [including the federal budget] be faithfully executed,’ and the Separation of Powers doctrine, pursuant to which Congress, not the President, determines under Article I how funds shall be spent and how taxes shall be raised. Republicans’ apparent interpretation of the debt ceiling of course (a) would obstruct the President’s execution of the law in the ways mandated by the budget — which, again, is duly enacted Congressional legislation — and (b) confer on the Treasury, via the ‘extraordinary measures’ that it would have to take, a de facto line item veto of the kind the Supreme Court has ruled violates Article I and the Separation of Powers.”
Some of the billionaire oligarchs who bankroll the Republicans might welcome the opportunity to make money off global financial disorder that the US government default would cause, but most of them are no more interested in causing financial market chaos than the rest of the world is. Big Money should tell McCarthy and what remains of sane Republican members of Congress to knock it off, and just increase the debt limit.
In the meantime, as Hockett suggests, Biden should continue to hold the line at not negotiating with Republican terrorists. He certainly should not agree to any cuts to Social Security or Medicare — which are funded separately from the general treasury, and need to be expanded, not cut back. Biden should let people know what is at stake. Let Republicans sue him and let the courts — even Trump’s MAGA justices — explain what the plain language of Article 14 and Article 2 means.
Republicans who want to stop the government from paying our debts are not “populists” or “conservatives.” They’re deadbeats. — JMC
From The Progressive Populist, February 15, 2023
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