From Yahoo:
“Why Congress can’t quit
playing chicken with the debt ceiling”
What’s happening With the
stability of the U.S. economy hanging in the balance, Democrats and Republicans
in Congress are once again engaged in their semi-regular game of chicken,
trading barbs over who is responsible for raising the debt ceiling. The
federal government operates on a deficit, meaning it spends more than it takes
in, so it has to borrow money to make up the difference. The debt ceiling is a
dollar figure set by Congress that represents the maximum amount the U.S.
Treasury is allowed to borrow. It doesn’t itself increase the deficit, but
simply creates room for the government to keep its financial commitments. For
most of the past century, the debt ceiling was routinely raised on a bipartisan
basis with little drama, largely because both sides understood that failing to
do so would lead to what Treasury Secretary Janet Yellen recently called
“widespread economic catastrophe.” If the government was unable to pay its
bills, funding for things like Social Security, military salaries, and a long
list of programs would suddenly dry up. This abrupt halt to federal spending
would likely be accompanied by a “historic financial crisis” that could create
global recession. In recent decades, debt ceiling votes have become
increasingly fraught as Republicans have used the risk of default to extract
concessions from Democratic presidents. The U.S. came perilously close to
breaching the debt limit in 2011, when the GOP-controlled House of
Representatives refused to approve an increase until then-President Barack
Obama agreed to significant spending cuts. Today, Republican Senate
Minority Leader Mitch McConnell is insisting that there will be no GOP votes to
raise the debt ceiling, which leaves Democrats to resolve the issue themselves.
The debt limit was technically breached at the end of July, but the Treasury is
currently using what it calls “extraordinary measures” to stave off default.
Yellen anticipates those measures will be exhausted sometime in October.
Why there’s debate The
debt ceiling and the disaster looming if Congress doesn’t agree to raise it are
entirely self-imposed. No other wealthy country has regular do-or-die fights
over the amount its government can borrow. But it would also be relatively easy
for lawmakers to eliminate the debt ceiling or raise it so high the deficit
would never come close to breaching it. So why has Congress never taken the
chance to free itself from this economic time bomb for good? The most
commonly cited answer for the continued existence of the debt ceiling is that
both parties see the regular fights over raising it as a chance to score
political points against their opponents. Many Democrats see debt ceiling votes
as a no-win situation for Republicans — either they betray their anti-deficit
principles by voting to increase it, or risk coming off as economically
reckless. The GOP, on the other hand, has used the votes to accomplish some of
its policy goals — like spending cuts. In 2011, McConnell called the debt limit
“a hostage worth taking.” Some pundits argue that both sides invite
fights over the debt ceiling because they know deep down that, for all of the posturing,
neither party is foolish enough to actually allow the country to default on its
debts. That knowledge, they say, allows lawmakers to take part in an
attention-grabbing form of political theater with little risk of major
consequences.
What’s next Democrats have
tied a debt-ceiling increase to a larger funding package needed to keep the
government from shutting down at the end of the month in hopes of compelling
Republicans to back both measures. If they don’t, Democrats could be forced to
raise the limit on their own using reconciliation — a limited process that can
be used to bypass the Senate filibuster.
Perspectives Neither party is willing to eliminate a tool they may find useful down the road “Each party, when out of power, has taken it as a political hostage, with Republicans being more ruthless.” — Paul Kane, Washington Post Everyone involved knows that the U.S. won’t ever breach the debt ceiling “It’s true that a default on the federal debt would fracture the economy and unleash a blood-dimmed tide over humanity — but it’s equally true that such a calamity has never happened, won’t happen this time and will likely never happen because members of Congress who love to play chicken never follow through. They always chicken out.” — Jack Shafer, Politico Lawmakers underestimate the risk that political posturing could go terribly wrong “Some argue that the debt limit provides useful leverage to extract fiscal reforms that would be hard to enact otherwise. However, the full faith and credit of U.S. securities should never be put at risk as a mere bargaining tool. Even if intended as a bluff, there is a risk that this tripwire might be triggered accidentally.” — Robert L. Bixby, The Hill
Conservatives use debt-limit
fights to reign in government spending “The debt-limit debate is one of the
few opportunities for Congress to reconsider implementing a financially ruinous
increase in federal spending. Fiscally responsible members of Congress should
not waste this opportunity.” — Wayne Winegarden, National Review
Voter misconceptions about the
debt limit make it a potent political weapon “Because the public closely
associates the need to raise the debt limit with the decisions that made it
necessary (always blamed on the ‘other side’), debt limit increases are
consistently unpopular, and not only with the Republicans who are typically
moralistic about the very idea of debt. ... So politicians of both parties look
for every opportunity to vote against such measures, or at a minimum to make
sure the ‘blame’ is shared across party lines.” — Ed Kilgore, New York
Both parties grossly
misunderstand the political incentives of debt-ceiling fights “Imposing
short-term costs on individuals who would be affected directly, along with
medium-term costs on the economy, in exchange for the possibility of a
public-opinion boost that everyone will have forgotten well before the
midterms, is a bad bargain even if it works.” — Jonathan Bernstein, Bloomberg
Debt-ceiling battles allow
both sides to avoid tough conversations about the federal debt “The way
forward must eliminate the debt-limit brinkmanship that endangers our economy.
It should also replace the recurring hand-waving and shouting over $28 trillion
of debt with a structured debate of substantive proposals to address the
underlying imbalance between taxes and spending. As the old saying goes, ‘Put
the legislative text where your mouth is.’” — Shai Akabas, Roll Call
Republicans believe the
worst-case scenario would be good for them politically “Instead of
Republicans learning how bad an idea taking the debt ceiling hostage is, we’re
in a situation again where the GOP and McConnell in particular are betting
against the United States in order to maximize their own political fortunes. If
the American people and companies take a beating in a new recession, what does
it matter if during the midterm elections Biden and Democrats get the blame?” —
Hayes Brown, MSNBC
The debt ceiling allows
lawmakers to have it both ways when it comes to the deficit “It’s simply a
way for members of Congress to have it both ways—to vote for deficit-busting
tax cuts and spending increases, while irresponsibly refusing to provide a
method of financing the deficits that those votes necessarily created. A
precise analogy would be to run up charges on one’s credit card and then refuse
to pay the bill on the grounds of personal financial responsibility.” — Bruce
Bartlett, New Republic
^ This gives a good summary of
what is going on and what could happen if the Debt Ceiling isn’t changed in the
next few days. ^
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