Debt limit standoff: Time to end the periodic madness and lift the cap
In as little as six weeks, the U.S. economy may suffer substantial and lasting harm. That’s when the United States could default on its debt, the product of the failure of Congress to raise the limit on how much money the nation can borrow to pay its bills. The debt limit itself is something of an oddity. It has nothing to do with spending or tax policy. It’s really just about paying the bills — the equivalent of a consumer maxing out the credit card but then deciding whether or not to make a payment to creditors.
Yet House Republicans have decided to, as President Joe Biden rightfully points out, use the limit as a hostage, attaching a package of steep spending cuts to its increase that the U.S. Senate is certain to refuse. Biden, too, is asking for a “clean” debt limit bill, like Donald Trump got multiple times while he occupied the Oval Office.
MORE:It's time to pass the Pennsylvania Fairness Act
MORE:Supreme Court gets what it deserves as public approval plummets
And now we are — tick, tick, tick — in the game-of-chicken phase, where each side waits for the other to blink before it all explodes.
There is, however, a sensible solution.
U.S. Sen. Chris Van Hollen is a lead sponsor of legislation that would, in his words, “defuse the economic time bomb,” that has been used repeatedly to threaten a doomsday scenario. How? Quite simply by eliminating the debt ceiling. The Maryland Democrat, along with Hawaii’s U.S. Sen. Brian Schatz and at least nine Democratic co-sponsors, are seeking to end this pattern of brinkmanship. He has correctly calculated that playing with fire is a good way to get burned — as happened in 2011 when an earlier debt limit crisis caused the nation’s credit limit to be downgraded for the first time ever. Such downgrades can be costly, as they cause interest rates to rise and existing debt to become far more expensive.
Lawmakers can certainly argue that the government of the United States is living beyond its means with a national debt of more than $31 trillion. Polls show a lot of Americans think so, too. This is likely because the debt has grown larger than the gross domestic product. And service on the debt is a major budget line item, with net interest payments exceeding $395 billion. Under such circumstances there is absolutely no reason why Congress should not be taking steps to reduce this imbalance through some combination of reduced spending (or at least limited spending growth) and higher taxes. After all, both approaches are effective, and both increased spending and tax cuts can be blamed for creating the deficits in the first place.
But this not what House Speaker Kevin McCarthy and his GOP majority are doing with the Limit, Save, Grow Act of 2023. There is no balance, no realistic chance of winning passage in the Senate. It’s mostly about virtue signaling with, incredibly, one of the first cuts going to the Supplemental Nutrition Assistance Program, with new work requirements for adult beneficiaries. It takes a similar hard-line with Medicaid.
That’s right: With all the potential ways for the federal government to save money, Republicans were anxious to balance the budget on the backs of the poorest of the poor by making it more difficult for them to get basic nutrition or health care. Should Democrats support such a measure, they would surely be sent packing by voters in their districts at the earliest opportunity.
It’s one thing to be at political loggerheads; that’s to be expected in these polarized times. But it’s really quite another to put the government into default and potentially trigger a far worse economic downturn than Americans have experienced so far. McCarthy doesn’t have the votes to pass a realistic budget bill. He has the votes to pass something that will make Democrats choke. So what’s the end game? The right-wing that has so captured the GOP has demonstrated a willingness to overturn elections, so how big a leap would it be to overturn an economy? Or is that just the fierceness Republicans are seeking to project in order to create leverage?
Time to stop the madness permanently. Raising the debt ceiling used to be a routine chore. It’s become a serious vulnerability, even a national security risk. Van Hollen’s bill likely has little chance of passage (it’s been around for at least six years), but it’s still the right thing to do.
— From the Baltimore Sun editorial board (TNS).