Debt ceiling D-Day is June 1
We’ve been following the looming debt ceiling crisis since January. At that time, the U.S. federal debt ceiling, limited by law, was reached, and the government began to take so-called “extraordinary measures” to keep things running as is without going into default. However, the problem has not been solved, and it is rapidly coming to a head. U.S. Treasury Secretary Janet Yellen says that if Congress doesn’t pass a law extending the debt limit by June 1, the “extraordinary measures” will run out and we will begin to go into default. That could cause catastrophic economic results, including a deep recession, a stock market crash, a spike in interest rates, and the government’s inability to send out Social Security checks, or make interest payments on Treasury bonds.
Some people say the Republicans want to blow up the U.S. economy this way. The theory is that the Republicans, who number in the minority, can only take back the White House and full control of Congress via this big gamble of (1) crashing the economy and (2) blaming President Joe Biden and the Democrats for the crash. To that end, Republicans are holding the debt ceiling, which is the bill that must be paid for past spending, hostage to budget demands for massive cuts in future spending for veterans, the environment, renewable energy, student loan forgiveness and other crucial items, even though these are two completely separate legislative processes. Republicans may think they can get away with such hostage-taking in part because the mainstream media notoriously play the “both sides at fault” game, or even worse, may be more inclined falsely to blame President Biden for the current crisis and its possible consequences.
Accordingly, we’re now in the stage of talks between President Biden and the Democratic Congressional leaders on one side, and U.S. House Speaker Kevin McCarthy , U.S. Senate Leader Mitch McConnell and their Congressional Republican colleagues on the other side. Importantly, what is taking place alongside such talks is a massive public relations battle by both sides, to be played out in part in the media. For Democrats, it is crucial to gain the upper hand in this PR fight, both to hold Republicans’ feet to the fire now, and to assign them the proper blame if they blow things up.
To that end, here’s the picture that may be forming:
–President Biden will make sincere offers and counteroffers, including reportedly being open to stricter work requirements for federal aid. In return, Biden has said he would like a longer debt ceiling period, for example two years, so that Republicans cannot come back again next year with more debt hostage-taking.
–Speaker McCarthy, under pressure from many hard-line House Republicans, will reject President Biden’s offers, sticking more or less to his previous poison pill bill.
–The GOP will cause the federal government to go into default on our obligations.
–President Biden will have the receipts to show he did all he could, having made repeated, reasonable concessions and acting like the grownup in the room (an effective and accurate Democratic frame), trying his best to stave off a default, but it was the intransigent Republicans who refused to budge.
–The voters, as well as wealthy Republicans and GOP-leaning big corporations, will excoriate the Republicans despite media bothsiderism, like they have done during federal government shutdowns of the past, and that will cause the GOP to come back after a short time with bigger concessions to get a debt ceiling deal done.
Note that this is somewhat of a “worst case” scenario. Hopefully, both sides will come to an agreement in the next two weeks, and a debt ceiling crisis will be averted, at least temporarily, with minimum concessions by the Democrats. However, the current GOP Congressional crop is so far right that they may well try to break the economy and see what results occur. Either way, President Biden seems to be doing the right thing now by being open to talks and making concessions. The alternative of just saying “no” to the Republicans would hurt President Biden and the Democrats by taking away their high ground and lessening the pressure on the GOP should a default occur.
Photo by @USArmy, used under Creative Commons license. https://is.gd/aPZenH
