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Liberals Are Persuading Themselves of a Debt Ceiling Plan That Won’t Work


BY Ezra Klein/Opinion Columnist
NYT
The debt ceiling might be the single dumbest feature of American law. Congress decides to spend money and later schedules a separate vote on whether the government will pay its bills. If the government doesn’t pay its bills, calamity ensues.

Moody’s Analytics estimates that even a short debt ceiling breach could cause a recession. An analysis by the White House’s Council of Economic Advisers modeled a more protracted default and foresaw a crash on the order of the 2008 financial crisis: The stock market falls 45 percent, unemployment rises by five points, and America’s long-term borrowing costs are much, much higher. All of this to pay money we already owe and can easily borrow. Madness.

Defenders of the debt ceiling will tell you that the limit has been around a long time and has largely operated to the good. America has never defaulted on its debts, but the debt ceiling has often motivated compromise between the two parties. That may be true, but it’s a bit like saying that since America has won every game of Russian roulette it’s played so far, it should keep playing.

And so I understand — and share — the interest in ways to render the debt ceiling null and void. Democrats should have eliminated the debt ceiling when they held Congress and the White House in 2021 and 2022. But they didn’t.

Now two more unconventional tactics are proving particularly popular in the liberal imagination.

In one, President Biden simply declares the debt ceiling unconstitutional, pointing to the 14th Amendment, which holds that “the validity of the public debt of the United States … shall not be questioned.” Five Senate Democrats, including Bernie Sanders and Elizabeth Warren, are circulating a letter calling on Biden to do just that. On Friday, 66 progressive congressional Democrats sent the president their own letter making a similar case.

In the other, the Treasury Department uses a loophole in a 1997 law to mint a platinum coin of any value it chooses — a trillion dollars, say — and uses the new money to keep paying the government’s debts.

In remarks after a meeting with House Speaker Kevin McCarthy, Biden said he was “considering” the argument that the debt ceiling is unconstitutional. The problem, he continued, is that “it would have to be litigated.” And that’s the problem with all these ideas and why, in the end, it’s doubtful that Biden — or any Democrat — will try them.

The legality of the debt ceiling or a trillion-dollar platinum coin doesn’t depend on how liberals read the Constitution or the Coinage Act. It depends on how three conservatives read it: John Roberts, Brett Kavanaugh and Neil Gorsuch, who are the closest the Supreme Court now comes to having swing justices.

It’s easy enough to come up with counterarguments that conservative justices are likely to find persuasive. Michael McConnell, a former judge on the U.S. Court of Appeals for the 10th Circuit, to which he was appointed by President George W. Bush, just offered one in these pages. “For the United States to fail to pay interest or principal on its debt would be financially catastrophic, but it would not affect the validity of the debt,” he wrote. “When borrowers fail to make payments on lawfully incurred debt, this does not question the validity of those debts; their debts are just as valid as before. The borrowers are just in default.”

The coin gambit is similarly easy to poke holes in if one wants to. Preston Byrne, a partner at the law firm Brown Rudnick, notes that the Supreme Court has often looked at statutes for which a simple reading of a limited law would seem to grant the executive almost unlimited powers. In many such cases, the court struck down those readings. Congress, the court has said, does not “hide elephants in mouse holes.”

My point is not that more conservative readings of these laws are right in some absolute sense. It’s that no such absolute sense matters. We just watched this Supreme Court wipe out decades of precedent to overrule Roe. It has repeatedly entertained cases that even conservative legal scholars thought farcical just a few years earlier. I still remember Orin Kerr, a law professor who clerked for Justice Anthony Kennedy, telling me at the beginning of the Obamacare case that there was “a less than 1 percent chance that the courts would invalidate the individual mandate,” only to update that to a “50-50 chance” as the court prepared to rule.

The Supreme Court does what it wants to do. Does it want to let the Biden administration dissolve the debt ceiling using a novel legal theory?

If testing the question wouldn’t cost anything, there would be no harm in trying. But I don’t think it is. The strength of the Biden administration’s political position is that it stands for normalcy. The debt ceiling has always been raised before, and it must be raised now. But if the administration declares the debt ceiling unconstitutional, only to have the Supreme Court declare the maneuver unconstitutional, then Biden owns the market chaos that would follow. Who will voters blame in that scenario? Republicans, who say they just wanted to negotiate over the budget, as is tradition? Or Biden, who did something no other president had done and failed?

Right now the positions are clear. The White House is open to budget negotiations but opposed to debt ceiling brinkmanship. Republicans are the ones threatening default if their demands are not met. They are pulling the pin on this grenade, in full view of the American people. Biden should think carefully before taking the risk of snatching it out of their hands and holding it himself.

LOL. The article is about why some liberals are dead wrong. Thought you'd love that. Reading must be a drag!

BTW, what is the proper ratio of the interest payment on our debt to the entire military budget? Why does that particular ratio even matter?

Isn't being able to pay BOTH, as well as other obligations, critically important?

Read #48 for an opposing view about whether the debt limit even maters in his opinion.

Some??? Haven't seen one hit a dart board with logical business sense yet.

Reading is essential. Garbage in garbage out though, as evidenced with you promoting Krugman from the NYT! Both are non-starters from the git-go.

The ratio per se isn't that important, however you have to look at what we're doing with the money and it's wasteful. Having a well (even though ours is woke and will weaken us...just watch!) funded military is essential.

We should take a sledgehammer to nations we give money to that actually hate us. Then there's the stupid crap that Biden is doing say in Ecuador (https://www.newsweek.com/fact-check-biden-administration-funding-drag-shows-ecuador-1753649) or Afghanistan (https://defconnews.com/2023/05/09/obiden-regime-still-shoveling-u-s-taxpayer-money-into-afghanistan/). You don't have to look too hard to see where the stupid is on display with taxpayer dollars. Didn't the Taliban get enough money from the US taxpayer???

Traders anxious about a possible government default are shunning U.S. Treasury bills, generally considered the world’s safest investment.


WSJ
They’re saying goodbye to Treasurys that will mature over the next several months while paying a premium to buy debt issued by Microsoft and Johnson & Johnson, two of the highest-rated U.S. companies. The result is—yes, you’re reading this correctly—corporate bonds trading at a yield discount to Treasurys. Wall Street’s uncertainty about the fate of Washington’s debt-ceiling negotiations also sent U.S. stocks falling. Meanwhile, President Biden is trapped in a lose-lose situation. If Democrats and Republicans fail to make a deal to raise the debt limit and the government is unable to pay its bills—an outcome expected as early as June 1—he’ll have a possible recession and the potential for global financial chaos hanging over his head as he runs for reelection. If Biden comes to an agreement with House Speaker Kevin McCarthy, critics will accuse the president of backtracking on his refusal to bargain over the borrowing limit.




So, investors believe some American corporate debt is less risky than U. S. Treasury Bills and will take on the corporations' risk- such that the interest rate on Treasury Bills has or will have to increase to attract buyers- and this in turn will result in a fall in the value of U.S Treasury Bonds. Bad news for a Treasury Bill owners whose Bills mature over the next several weeks, at least.

The Democrats recently had control of the House, Senate, and Presidency. Has anyone asked why they did not eliminate the debt ceiling or just raise it to $60 trillion?

Because both would be irresponsible. Reps could have done this too throughout history, but haven't either- despite voting for limit increases many times.

We shouldn't extend debt until we need to when there is a short-fall.

This is the historical process, for better or worse.

They already pay all the taxes.

With their hard earned money. Thought and prayers is silly since they have no value to those that have already killed God.

Permanently for you.

He gave you a rebate for your trendy fart car.

Show thanks.

So says the rich man.

Your envy is noted.

If you were a patriotic Democrat who cared about your rulers and their fiscal incompetence and criminality, you would have refused the tax credit for the good of the regime.

In Texas the bottom 99% also pay ZERO state income tax.

At the federal level the top 1% pay 42% of the nation’s income tax.

Gaslight!

Nope. It’s all true.

The beauty of California’s heavy progressive tax system is if the top 100,000 incomes out of 39 million people left the state, 50% of the income tax revenue would vanish.

You mean those "government benefits" for which I never voluntarily signed a contract but was forced to pay regardless in more ways than one? Pay us or else, pay us so we may send you a pittance in return to show our munificence. I think that's always the gist of it.

It's not about the climate MACS...it's just another scheme to scare the proles with another hobgoblin to make it easier to plunder them.

This puts the DEBT CEILING clown show that the corporate press is subjecting us to every day in a proper perspective as they urge you to take sides on which wing of the Uniparty is good and which is evil. 🤡😈

The reality is there is no meaningful difference between the majority of so-called "conservative" right-wing Republicans and the "progressive" left-wing Democrats. The evil Democrats make no illusions about their goals that they want to continue spending like drunken sailors and putting all the drinks on your tab. The Republicans supposedly are the sober ones that drink responsibly, some people still believe that anyway.

Michael Malice's memorable quote says, “Conservatism is progressivism driving the speed limit.” True enough, there really are few true conservatives these days, it's politics over principle when the Republicans are in power, anybody that still thinks they are the party of small government and fiscal responsibility needs to check in for a mental health evaluation.

The debt ceiling melodrama is a Uniparty diversion from reality

There is no real resistance in D.C. to the growth of government and the money printing fiasco.

JORDAN SCHACHTEL
MAY 26, 2023

You walk and talk just like a LEFTY.
You not only want me to return the little bit I have of what they originally stole from me, but you also want me to give back what I never received or will never receive.

Biden, McCarthy Put Final Touches on Their Debt-Ceiling Deal, President Says
House lawmakers could vote as early as Wednesday as conservatives voice opposition


WSJ
President Biden and House Speaker Kevin McCarthy (R., Calif.) have ironed out the final elements of their agreement to raise the nation’s borrowing limit, Biden said Sunday evening, ahead of congressional votes on the deal that could come as early as Wednesday in the House.

Biden’s announcement came a day after White House and House Republican negotiators reached a tentative deal to raise the debt ceiling for two years and curb two years of government spending. They have been racing to beat a deadline of June 5, when the Treasury Department says the government will run out of money to pay its bills, which could trigger an unprecedented default on U.S. government debt and cascading problems through the global economy.

“The agreement prevents the worst possible crisis—a default for the first time in our nation’s history, an economic recession, retirement accounts devastated, millions of jobs lost,” Biden said in remarks from the White House on Sunday evening.

With some conservative Republicans in both chambers signaling initial opposition to the deal, Biden urged both chambers of Congress to approve the agreement and said McCarthy would have sufficient votes in the Republican-led House to secure passage.

He also sought to quell concerns among Democrats over some of the deal’s provisions, such as additional work requirements for certain government safety-net programs, and rejected criticism from some progressive lawmakers that the agreement would let vulnerable people go hungry. “That’s a ridiculous assertion,” Biden said.

McCarthy on Sunday began promoting the measure to wary conservatives within his GOP conference and to a wider audience, saying the tentative agreement was a historic achievement for Republicans.

He said the agreement included GOP priorities such as caps on certain spending categories, a clawback of funding for new tax-enforcement agents, additional work requirements for some government safety-net programs and expedited rules for approving construction projects. “So, maybe it doesn’t do everything for everyone. But this is a step in the right direction that no one thought we’d be at today,’’ he said on the Fox network.

Biden and McCarthy, who talked for about 90 minutes on Saturday night, spoke again on Sunday, after which text of the legislation was expected to be released.

Details of the agreement were still emerging, with lawmakers drawing different conclusions about what it contained. In a sign of the long road ahead, several of McCarthy’s GOP members indicated that they would oppose the deal. Many had urged him to push harder for elements of a bill that House Republicans had passed last month to raise the debt ceiling for about a year while curbing government spending for a decade and rolling back some of the clean-energy incentives in last year’s Inflation Reduction Act, one of Biden’s signature policy accomplishments.

They said the deal falls short of the House GOP goal, imposing spending limits for the 2024 and 2025 fiscal years for nonmilitary spending. Beyond that, it includes spending targets that aren’t enforceable.

Rep. Ralph Norman (R., S.C.), in a late-night tweet, called the tentative deal “insanity.”

“Not gonna vote to bankrupt our country,” he wrote. “The American people deserve better.”

Rep. Ken Buck (R., Colo.) wrote on Twitter that he was “appalled by the debt ceiling surrender.”

Rep. Dan Bishop (R., N.C.) wrote Sunday that McCarthy hadn’t clawed back enough of the $80 billion that Congress approved last year to modernize the Internal Revenue Service and hire more staff. “So there will be 85,260 more IRS agents rather than 87,000 to eat you alive,’’ he wrote on Twitter. “Big win.”

He also said that McCarthy had undermined GOP efforts to claw back additional IRS money next year by agreeing to raise the debt ceiling enough to meet government needs for two years.

McCarthy played down the opposition among House GOP lawmakers, saying that “more than 95% of all those in the conference were very excited.”

“We capped so that the president can’t just spend money wildly,” McCarthy said, calling the deal “worthy of the American people.”

House Republicans hold a narrow, 222-213 majority, and so just a few GOP defections could endanger the bill. One Democrat, Rep. Jim Himes of Connecticut, said that some in his party could wind up helping Republicans pass the legislation because the measure is a “very, very small bill’’ that falls far short of making the cuts and changes that House Republicans passed last month.

“It’s not a bill that’s going to make any Democrats happy, but it’s a small enough bill that in the service of actually not destroying the economy this week may get Democratic votes,’’ Himes said on Fox.

Main elements of the framework agreement include:

—A small cut in nonmilitary spending for the 2024 fiscal year, which begins Oct. 1, and a 1% cap on spending increases for the 2025 fiscal year. Veterans’ health programs would be exempt.

Military spending in fiscal 2024 would be roughly at the level of Biden’s fiscal 2024 budget request, according to two people familiar with the matter, which would amount to about a 3% increase.

—A clawback of some unspent Covid-19 money that Congress passed to battle the pandemic.

—A $10 billion reduction in funds that Congress approved last year for the Internal Revenue Service to boost tax enforcement and modernize its technology.

—A provision aimed at pushing Congress to give up its practice of funding the government through a single, omnibus bill, as it has done in recent years, and to return to the tradition of passing 12 appropriations bills that cover the various parts of the federal budget. The measure has potential to win conservative support for the deal and was pushed by an influential Republican, Rep. Thomas Massie (R., Ky.), who believes that Congress should follow regular order when conducting its business.

The provision would call for the U.S. government to operate under a so-called continuing resolution at 99% of the prior year’s spending levels until the spending bills were enacted. Lawmakers were awaiting text to see the date at which the cuts would be triggered.

—Imposition of a one- or two-year time limit to complete environmental reviews for energy projects. Currently, reviews required under the National Environmental Policy Act of 1970 take an average 4.5 years to complete and involve multiple federal agencies.

It is unclear how those timelines would be enforced, however. In recent weeks, lawmakers in both parties have begun holding talks on a broad overhaul of the environmental review process, and McCarthy said he would support further changes to permitting rules.

—A temporary expansion through 2030 of the requirement that some able-bodied people without dependents hold a job or be enrolled in a job training program to receive food stamps, which is a Republican priority.

The deal would largely require able-bodied, low-income adults without dependents between the ages of 49 and 54 to work to receive food aid, phased in over three years. Currently, under rules resuming by July, adults between the ages of 18 and 49 without dependents or disabilities can receive benefits for no more than three months within a three-year period, unless they are working or enrolled in a work program.

A leader of liberal Democrats said she needed to learn more about the deal, particularly about the proposed expansion of work requirements for food aid.

“This is saying to poor people and people in need that we don’t trust them,” said Rep. Pramila Jayapal (D., Wash.), chairwoman of the Congressional Progressive Caucus, on CNN Sunday. “It is really unfortunate that the president opened the door to this.”

Jayapal said the White House shouldn’t count on her caucus’s support but didn’t immediately pledge to oppose the agreement.

If the bill passes the House, it could get bogged down in Senate delays. It can take a week or more to move legislation through the Senate unless senators unanimously agree to speed up the process.

It isn’t clear whether any senator will object to an accelerated process, but last week Sen. Mike Lee (R., Utah) warned that he would be ready to object to unanimous consent if the bill didn’t meet his expectations.

“I will use every procedural tool at my disposal to impede a debt-ceiling deal that doesn’t contain substantial spending and budgetary reforms,” he wrote on Twitter Thursday. “I fear things are moving in that direction. If they do, that proposal won’t face smooth sailing in the Senate.”


Link to agreement/House Resolution:

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://docs.house.gov/billsthisweek/20230529/BILLS-118hrPIH-fiscalresponsibility.pdf

I'm sorry, I don't discuss with a LEFTY. how much LEFTY has plundered and continues to plunder on so many levels from my family. Just the thought of it on federal, state, county, and town levels makes a sane person want to take up pitchforks and torches. That probably doesn't connect with you, Stockholm Syndrome is a common mental condition induced by believing in progressive government policies.

Besides, you'll probably try to convince me it's not real, that government is really my net sugar daddy and my benefactor.
I've heard it all before.

Sounds like Russian disinformation to me...

Is Le HockeyDad a Russian in French Clothing??

So the HOUSE passed the Debt Ceiling Raw Deal Bill jokingly called the the Fiscal Responsibility Act. Yup.

As usual, no meaningful spending cuts (actually more spending), smoke, and mirrors, backroom deals, and empty promises.
Predictably, more Democrats voted for the bill than Republicans.
The Titanic remains safely on course to oblivion.

McCarthy Reportedly Gave Democrats Secret Concessions In Exchange For Debt Ceiling Votes

I demand parades and a new holiday. Debt Ceiling Disaster Avoidance Day