“Governing-By-Crisis Has Gotten Even Worse”: The Risk That America Will Default On Its Debts Is Now Higher Than Ever
It’s tempting to say that the upcoming need to increase the debt ceiling is another depressing iteration of the governing-by-crisis that we’ve gotten used to over the last five years since Republicans took control of the House. But it isn’t. It’s worse. The chaos that is the Republican caucus in the House of Representatives is about to have some very serious effects on the entire country.
Why is this crisis different from those that came before it? In all of the government shutdown/debt ceiling crises of the last five years, we knew how they would end: eventually, after putting up a show of fighting against that dastardly Obama administration, John Boehner would allow a vote on a bill to either fund the government or raise the debt ceiling, knowing that it would pass only with the votes of Democrats plus a few dozen Republicans sane enough to want to avoid catastrophe. The conservatives would cry “Betrayal!” but the crisis would be over.
But now even that may not be possible. Here’s the latest news from Politico this morning:
House GOP leaders initially planned to vote on a red-meat proposal Friday pitched by the Republican Study Committee to increase the debt ceiling while imposing new limits on executive-branch power. That measure stood no chance of passing the Senate, but would at least show effort.
Yet when House Majority Whip Steve Scalise’s (R-La.) team tested Republican support for the legislation, it fell far short of the needed 218 votes, and Speaker John Boehner (R-Ohio) postponed any floor action.
Now, the U.S. government is 12 days from reaching the debt limit without a clear plan of what to do.
Boehner, McCarthy and other GOP leaders are refusing at this point to move ahead with a “clean” debt ceiling bill insisted on by President Barack Obama. Senior leadership aides said they couldn’t find the 30 Republican votes needed to join with all 188 Democrats to pass that proposal — a bleak indication of the current state of play.
So there aren’t even 30 Republicans in the House willing to keep the United States government from defaulting on its debts. How did we get here?
First, let’s establish some context, since it’s been a while since we had a debt ceiling crisis. For some idiosyncratic historical reasons, the United States has a statutory limit on how many bonds it can issue to pay for what Congress buys, meaning that after it passes a budget, Congress has to pass an extra bill allowing the government to pay for that budget (the only other industrialized country that has a debt ceiling is Denmark, which might dim Bernie Sanders’ affection for the place, though theirs is set so high it doesn’t become a political football). For almost a century, debt ceiling increases were an occasion for brief political theater, as members of the party out of power would make some floor speeches about the administration’s outrageous spending, and then the bill would pass extending the ceiling for a year or two, because even the most committed opponents of the administration weren’t so deranged as to actually want to risk the United States government defaulting on its debts. But that was before the Tea Party came to town.
If a new bill raising the ceiling doesn’t pass by November 3rd, we will default. The Obama administration, as it always has, insists upon a “clean” debt ceiling increase — just increase it, and then we can argue about our other policy disagreements without threatening the full faith and credit of the United States. Republicans, however, see this as a great opportunity for blackmail.
So why are we even more likely now to fail to pass an increase than we were when we had this same crisis in 2011, then again in 2013, then again in 2014? Look at what’s going on in the House. Conservatives there are feeling emboldened because they just got rid of John Boehner, as they had wanted to do for so long. They feel strong and empowered, so naturally they believe that this is a battle they can win, even if they’ve lost before. And they’ve upped their demands.
Now they want not just general budget cuts in exchange for raising the ceiling, but cuts specifically to Medicare, Medicaid, and Social Security. That demand was contained in a document the House Freedom Caucus put out recently, and the conservative Republican Study Committee’s proposal would raise the ceiling in exchange for $3.8 billion in cuts to those programs over the next decade, along with a freeze on all regulations until Barack Obama leaves office. If they think Democrats would ever accept those terms, they’ve lost their minds. But they seem serious.
But it isn’t just this recent revolt. As Jackie Calmes and David Herszenhorn of the New York Times recently pointed out, today’s House is even more conservative than it was when we came so close to defaulting before:
The legislative math has only grown more difficult. When Congress last voted in February 2014 to suspend the debt limit, 28 House Republicans joined nearly all Democrats in support; 199 Republicans were opposed. Now there are fewer Democrats in the House and if all 188 of them voted for an increase, Republican leaders would need 30 votes from their side for a 218-vote majority — two more than last year.
Yet nine of last year’s 28 Republican supporters have left Congress and at least three of their Republican successors — Representatives Dave Brat of Virginia, Steve Knight of California and Mark Walker, Republican of North Carolina — are almost certain to be opposed.
Also, 14 Democrats who voted to increase the debt limit are gone, replaced by Republicans, some of whom are likely to vote no.
That’s why they can’t even find 30 Republicans to vote for a clean increase. Then there’s the question of the next Speaker, who will be the one actually shepherding this crisis if Republicans stick to their schedule of electing the new Speaker next week. While Paul Ryan hasn’t said publicly what he thinks ought to be done, he voted against the increase last year. This topic surely came up when he went to the Freedom Caucus to win their support. What did he tell them? They fervently want to use the threat of default to extort the administration into satisfying some of their policy goals. Is one of Ryan’s first acts a Speaker going to be turning his back on them? Don’t bet on it.
All this suggests that every force involved is propelling Republicans not just toward forcing a crisis, but forcing an actual default. At some point, they might realize that “Republicans are holding a gun to the head of the American economy and they’ll fire unless we let them slash Social Security and Medicare” isn’t exactly a winning political message to send. But who knows how much damage will be done before they realize that?
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line, The Washington Post, October 23, 2015
“House Freedom Caucus Demands”: Granting The Insurgents Continuing Power To Be Disruptive
It is looking likely that Rep. Paul Ryan will be elected Speaker of the House next week. Who knows what has transpired behind closed doors, but the word is that he and the Freedom Caucus reached a deal that won enough of them over for him to be elected.
What we also know is that the Freedom Caucus designed a questionnaire for speaker candidates. Kevin Quealy and Carl Hulse have done us all a service by translating those demands from Congressional legalese into plain English.
In looking at the list of 21 items, a lot of the things they are pushing for would simply undo the reforms instituted by Newt Gingrich that put power in the hands of the House Leadership – specifically the Speaker. In that way, they grant the insurgents continuing power to be disruptive.
But there are a few things that would mean pretty immediate chaos. For example, item 13 asks: are you willing to hold the debt limit hostage until we prevail on other issues? Specifically, the Freedom Caucus wants “structural entitlement reforms” in the 2016 budget and the Default Prevention Act (which President Obama has promised to veto) included in any legislation that raises the debt ceiling.
Given that the Treasury has informed Congress that the debt limit will be reached November 3rd – exactly one week after the House votes for a new Speaker – that doesn’t give Paul Ryan a lot of time to work this one out.
Making that job even harder is item 7 which seeks to institutionalize the so-called “Hastert Rule.” It would require that Republicans consider only legislation that has the support of the majority of their party. That would eliminate the possibility for Ryan to develop a coalition of moderate Republicans and Democrats to raise the debt ceiling.
If all that weren’t bad enough, item 15 demands that the new Speaker refuse to pass a budget that contains funding for Planned Parenthood, “unconditional amnesty,” the Iran deal and Obamacare. In other words…”We demand a government shutdown!”
There are several other interesting items, like a demand to impeach the IRS Commissioner, turn the highway program over to states, stick to the spending caps in sequestration, etc. But in a deliciously hypocritical move, item 6 demands that Republicans who signed the discharge petition to fund the Ex-Im Bank be punished, while items 4 & 5 demand that members who oppose rule changes and/or vote their conscience not be punished.
If Rep. Ryan has in any way agreed to these demands, things are going to blow up in the House very quickly. If he and the Freedom Caucus simply put off dealing with them, things are going to blow up in the House very quickly. Get my drift?
By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, October 24, 2015
“Default Prevention Act, Really?”: House GOP Plays With Matches; Will The Economy Burn?
The Republican-led Congress has just 12 days before the nation’s debt ceiling has to be raised. If lawmakers fail to meet their responsibilities, the country won’t be able to pay its bills, we’ll default on our debts, the full faith and credit of the United States will be in jeopardy, and the economic consequences will be severe.
At this point, congressional Republicans appear to be divided into two groups. The first, which includes the GOP leadership, knows it must raise the debt ceiling, but this faction has no idea how to complete the simple task. The second, which includes far-right members in both chambers, wants to hold the debt ceiling hostage, threatening to crash the economy on purpose unless Democrats meets their demands, but this faction hasn’t bothered to fill out the ransom note.
So far, markets aren’t panicking, because everyone is working from the assumption that Republicans won’t deliberately create a recession for no reason – though anything’s possible.
What’s striking, though, is how little work is getting done. We’re 12 days away from a dangerous deadline – Congress is only in session for 7 of those 12 days – and Congress isn’t even trying to move towards a resolution yet. Instead, the GOP-led House spent time yesterday on something called the “Default Prevention Act.”
With the potential for an unprecedented federal default two weeks away, House Republicans on Wednesday plan to pass legislation not to avert disaster, but rather to manage it, channeling daily tax collections to the nation’s creditors and Social Security recipients if the government’s borrowing limit is not lifted.
Let’s put this in everyday terms. Imagine a gang told you they plan to burn down your town unless their demands are met. You’re skeptical and tell the gang to go away. But the gang members stick around and say, “Before we burn down your town, let’s start making plans to prioritize which parts of the town you might want to rescue before we turn violent.”
That, in a nutshell, is what the “Default Prevention Act” is all about – the gang members passed a bill yesterday to prioritize which bills they’ll allow the United States to pay, and which bills will get burned by their fire.
The problem, of course, is that all of this is completely insane.
What we’re talking about is a plan in which Republicans try to manage the fire from their own arson, “channeling daily tax collections to the nation’s creditors and Social Security recipients” after they refuse, on purpose, to raise the debt ceiling.
And why would GOP lawmakers prioritize the nation’s creditors and Social Security recipients? On the former, because so much of the global economy rests on U.S. Treasury bonds, a deliberate default risks crashing financial systems across the planet. That would be … catastrophically bad.
On the latter, congressional Republicans don’t want to be responsible for cutting off Social Security checks for millions of American seniors, right in time for the holidays.
The “Default Prevention Act” is, by this measure, misnamed. It would prevent the nation from defaulting on some debts, while encouraging the nation to default on others.
Making matters just a little worse, Slate’s Jordan Weissmann explained that the GOP plan appears to be illegal and literally impossible to implement.
[E]ven if the government could borrow to pay bondholders and seniors, crossing the debt limit would still be plenty apocalyptic. Treasury’s computers still might not be capable of prioritizing its obligations, in which case we’d still end up failing to pay some bondholders despite Congress’s intentions.
The mere threat of such an accidental default could cause markets to seize. If the Treasury did successfully keep money flowing to its lenders, meanwhile, the government still wouldn’t be able to cover all of its other costs, and thus would be forced to implement massive, immediate spending cuts to other programs, likely dragging the U.S. and probably the rest of the world into a recession.
He’s referring, of course, to a recession that could easily be avoided by simply raising the debt ceiling – a simple, procedural vote that costs nothing.
Tick, tock.
By: Steve Benen, The Maddow Blog, October 22, 2015
“You Take Goodwill Where You Can Find It”: Americans Already Like Boehner More Now That He Is As Tired of Congress As They Are
House Speaker John Boehner still has to cross a few things off his to-do list before he’s allowed to say good-bye to Congress forever: (1) Find replacement. (2) Save economy. However, many Americans already seem to like him better now that they know the Ohio Republican is as sick of dealing with Congress as they are.
According to a new Gallup survey, Boehner’s approval rating has jumped from 23 percent in August — the lowest point it ever reached during his tenure — to 31 percent, heights he hasn’t seen since the beginning of last year. His approval rating remained unchanged among the nation’s Republicans, but independents and Democrats are suddenly much more fond of him.
Now, 45 percent of the country still has an unfavorable opinion of the soon-to-be-retired elected official, but when many of your colleagues have spent months griping about how much they hate you, you take goodwill where you can find it. However, the shiny-happy forgiveness of the American people may not last if Congress fails to raise the debt limit in the upcoming weeks — the last big vote that Boehner will have to force-feed his fractious party before he lets it all go, turning away and slamming the door, realizing that distance makes everything seem small.
If that wasn’t difficult enough on its own, a Cutthroat Kitchen–style handicap has been thrown at Congress. Treasury secretary Jack Lew warned Congress today that the U.S. is set to hit the debt ceiling two days earlier than he expected. Now Congress has only until November 3, taking away valuable time to wait until the last minute before rushing to stave off the “political equivalent of a dumpster fire” that awaits us if the debt ceiling isn’t raised. If the debt ceiling isn’t raised, the federal government won’t be able to pay bills, its workers, or soldiers and Social Security checks. Raising the debt ceiling doesn’t give the federal government a thumbs-up to start spending money on new things — it only makes sure that the federal government is able to fulfill its obligations and pay for things it has already approved.
In case that didn’t sound scary enough, Lew wrote a letter to Boehner, who planned on leaving D.C. on October 30, noting that “In the absence of congressional action, Treasury would be unable to satisfy all of these obligations for the first time in the history of the United States.” Or, translated out of bureaucrat-ese, “Dude, this would be a historically bad way to end your career.”
Congress is on recess this week, but Politico reported yesterday that Boehner is planning to quickly do something about the debt limit next week. A few GOP politicians think the debt-limit deadline, growing ever closer, is just the Obama administration’s way of forcing legislators to do what it wants. Senator Susan Collins told Politico, “It is interesting, which is a polite word, that all of a sudden the administration moved up considerably the timing of when the debt limit needs to be extended. What I’ve found over the years is that the date on which the debt limit truly has to be increased seems to be a very squishy date that often changes depending on the political winds.”
Congressional Republicans usually try to get a few spending decreases legislated along with a debt-limit increase, but there may not be time for that this year — which is not going to make his conservative colleagues happy. A Boehner spokesperson told the AP yesterday, “the Speaker has made it clear that he wants to solve some outstanding issues before he leaves. No decisions have been made, but a resolution on the debt ceiling is certainly possible.”
The Wall Street Journal asked 64 economists whether they thought the government was screwed and definitely on the verge of default. “Not enough wackos to do that,” one said, another added, “They are not THAT irresponsible.”
With only a few weeks left for things to be resolved, we’ll see if they’re right.
By: Jaime Fuller, Daily Intelligencer, New York Magazine, October 15, 2015
“Taking Stock Of The Global Dysfunction On The Right”: Raising The Debt Ceiling Won’t Prove House Republicans Are Sane
After House Speaker John Boehner announced his decision to resign at the end of October, and then more urgently when the Treasury Department alerted Congress that the deadline to increase the statutory debt limit had advanced to the beginning of November, a sense of dread momentarily overwhelmed official Washington.
Budget experts, economists, and anyone with a political memory going back at least four years were abruptly consumed with the likelihood that the responsibility for increasing the debt limit would fall to an untested new speaker—and, more troublingly, a speaker whose election would require him to placate House hardliners with dangerous promises.
The solution to the dilemma was obvious at the time, and remains so: An unencumbered Boehner could place legislation to increase the debt limit on the House floor, and it would pass. But until this week it was unclear how aggressively he intended to clean house before his departure, or whether he’d leave multiple obligations to his successor.
Though the speakership crisis and the debt-limit crisis remain unresolved, the sense of alarm has drained out of the story almost as rapidly as it emerged. Cooler heads have seemingly rescued the debt limit from conservative hostage-takers. And that has created a temptation to celebrate averted catastrophe as a triumph of political reality over right-wing fanaticism.
Succumbing to that temptation would be a huge mistake. It is crucial at this point to take stock of the global dysfunction on the right, and appreciate just how badly it has imperiled our system of government.
We owe the prospect of an uneventful debt limit resolution to a deus ex machina. Boehner’s heir presumptive, Majority Leader Kevin McCarthy, abandoned the race for speaker to the tune of Yakety Sax, denuding the House Benghazi Committee along the way and compelling Boehner to consider increasing the debt limit—either without precondition, or as part of a genuinely bipartisan agreement—before he leaves Congress.
Despite rumblings from the other chamber, this should go down fairly smoothly in the Senate. Senator Majority Leader Mitch McConnell’s chief deputy, Sen. John Cornyn of Texas, said in a recent CNN interview that he’s “ready to raise the debt limit ‘until 2017’ in order to get the matter off the table during an election year. McConnell, sources say, feels the same way, and the two sides are discussing the possibility of raising the debt limit until March 2017, just two months after a new president and Congress are sworn in.” Crisis deferred.
Debt-ceiling dramas like this aren’t borne of necessity. They’re concocted to appease reactionaries in the House. In this way, they’re an artifact of the Tea Party insurgency five years ago, and the untenable promises GOP leaders made to conservatives after President Obama was first elected. The legislative landscape is littered with such artifacts—past hostage crises, consensus immigration legislation, even the Benghazi committee itself—and it’s our good fortune that several of them are now at the forefront of U.S. politics simultaneously.
The fact that Republicans revealed the Benghazi Committee to be an elaborate farce, just in time for Hillary Clinton to testify before it, and that the’re likely to extend the Treasury Department’s borrowing authority without incident, can both be construed as side-effects of overreach—a natural political check on extremism that prevents the legislature from becoming completely weaponized. “Whether or not Boehner actually ends up sparing us the needless drama of a protracted confrontation,” writes Greg Sargent at The Washington Post, “the fact that he’s looking to resolve this without one itself confirms how this will ultimately end, no matter what has to happen along the way. And there’s no need for anyone to pretend otherwise.”
There’s something comforting about that interpretation, and at a general level, it’s basically correct. But it doesn’t account for the enormous role coincidence played in saving the country from another near-catastrophe, or outright default, in this particular instance.
It would thus behoove us to be mindful of how badly things could have gone if events had transpired slightly differently—if the debt limit deadline hadn’t budged, if McCarthy had succeeded Boehner, by promising confrontation with the White House—before moving on to the next big story. Republican dysfunction has never caused the U.S. to default, but it does create a much higher-risk environment. One plausible remedy lies in the hope that the confluence of events—the speakership crisis, the debt-limit drama, the Benghazi admissions, the Republican primary meltdown—will, in James Fallows’ words, eliminate “the discomfort of reporters, old and young alike, with recognizing that the United States doesn’t currently have two structurally similar political parties approaching issues on roughly comparable terms [but] one historically familiar-looking party, and another converting itself into something else.”
In an interview with Bloomberg View, the political scientist Thomas Mann—who, along with his coauthor Norm Ornstein, has been at pains for years to awaken the press to the reality of modern American politics—explained that “the solution … must focus on the obvious but seldom acknowledged asymmetry between the parties.”
Under quieter circumstances, that would be a pipe dream. Under the extreme circumstances of the moment, it’s a little more plausible. First, though, everyone must resist the temptation to disaggregate these stories and chalk them up individually to dramatic, but ultimately normal, politics.
By: Brian Beutler, Senior Editor at The New Republic, October 16, 2015
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