Friday, September 11, 2015

Republicans Actually Seem Ready to Force a Default This Time

by Neil H. Buchanan

My new Verdict column describes the latest nonsense from House Republicans, who appear to be seriously preparing to take a fateful (and catastrophic) stand in the next debt ceiling standoff.  With a dangerously limited number of days on the legislative calendar, Republicans were not merely wasting time delaying the Iran nuclear deal (which was a fait accompli), but Paul Ryan was also leading the Republicans on the Ways & Means Committee in more meaningless political theater.  The committee held a hearing this week on their proposed "Default Prevention Act" and the related "Debt Management and Fiscal Responsibility Act of 2015."

Just when it did not seem possible for Republicans to be more cynical, they pull something like this.

It is possible that the government will not be shut down at the end of this month.  All the evidence does suggest that there will in fact be another shutdown in October (notwithstanding Republican leaders' loud claims last year that they understood the responsibilities of governing, and that they would prove to the public that they could be trusted with power), but maybe not.  I happened to see Rachel Maddow's show last night, and her theory is that because almost everyone in Washington hates Ted Cruz, and because Ted Cruz is the face of the shutdown movement, Republicans will rally against him.  Maybe.

In any case, as we learned in 2013, a shutdown does not necessarily stop the march toward the drop-dead date on the debt ceiling.  There are critical operations that have to stay open, some payments are unaffected by a shutdown (Social Security checks, for example), and so on.  In any case, the best current guess is that the final limit on the debt ceiling will be reached in November or December.

With the debt ceiling looming, what are Republicans doing?  Their Orwellian "Default Prevention Act" would actually do two things: (1) Increase the debt ceiling, but (2) Guarantee that a default would still happen.  How can that be?  The proposed bill would require the president, even after the drop-dead date, to borrow enough money to pay interest on the debt and to cover Social Security benefits.  But everything else would still be on the chopping block.  The Republicans continue to try to define "default" as meaning solely "failure to pay principal and interest payments on the national debt," but that is simply wrong.  Even the Congressional Budget Office, which is now run by a Republican-installed director, calls the required payments on non-debt-related items "obligations," which they are.

Readers who are interested in more of the gory details should read my Verdict column.  Here, I want to ask a different question: What is their real game plan?  We know that these bills will never pass.  Even if they were not filibustered in the Senate, the President would rightly refuse to sign any such legislation.  So, again, what is really afoot?

The Republicans proposed these two bills, giving them Orwellian titles that suggest that they are trying to avoid default and manage the debt.  Marking up the bills provides Ryan an excuse to hold a hearing (yesterday), in which he set the tone with an opening statement that, even considered charitably, is a misdirection play.  Consider these sentences from the first paragraph: "So when we talk about the dysfunction in Washington, let’s remember the single greatest dysfunction is this constant, reckless buildup of debt. That is the biggest threat to our credit rating because that is the biggest threat to our economy."  Actually, of course, the greatest threat to our credit rating really is that Republicans keep threatening to prevent the country from paying its bills.  But none of that matters to the Republicans, because they use any discussion of the debt ceiling as an excuse to say, "Debt.  DEBT!"

The Republicans' staffers on Ways & Means created an amateurish Q&A page for the hearings, in which they describe the second proposed bill as an effort "to establish a new debt limit communication framework."  See?  It's really all about communication.  What kind of communication?  "The legislation requires the administration to appear before Congress prior to each potential debt limit increase and provide testimony and detailed reports on: the national debt and its key drivers; explicit short-, medium-, and long- term debt reduction proposals; and progress on debt reduction."

More political theater!  Republicans want more opportunities to blame the need to increase the debt ceiling on the administration.  As I have said many times, it is good and necessary to have the debt rise over time, but even Paul Ryan's budgets, magic asterisks and all, would still take ten years to reach annual balanced budgets.  In the meantime, that means that the debt would rise, and thus that the debt limit will need to be increased (or, let's say it together, repealed). 

The Republican staff says that "both of these bills demonstrate that Republicans want a debt limit process with more stability and less risk," and that they will provide "certainty for our economy and financial markets by taking the threat of default off the table."  Who cares that neither of the proposed bills would do any of that?

When the debt ceiling drop-dead date approaches, the Republicans will say that they did their part to try to prevent default,  but the Democrats blocked them.  And, they will surely add, it is now time for Democrats to agree to negotiate.  No more "my way or the highway" from the dictator president!

In short, it is difficult to see how this week's maneuvers at Ways & Means are anything but the foundation to allow Republicans to have a better negotiating posture in the upcoming debt ceiling standoff.  Which means that they are planning to have a debt ceiling standoff.

I suppose, however, that there is another possible explanation here.  Republican leaders might well know that President Obama is never going to blink, and (as some people I have spoken with on the left insist) Wall Street will prevent its wholly-owned party from causing a default, stepping in at the eleventh hour to restore sanity.

If that is what is really going on, and the Republican leaders know it, then the political theater is not actually being performed for the benefit of the public at large, but for the tea partiers in Congress and their supporters.  Yesterday's hearing might, therefore, be even more cynical than it looks, because it could be nothing more than an opportunity for the "I don't understand government debt, but I'm sure I don't like it" crowd to have another moment in the spotlight.

Of course, the threat of default alone can affect financial markets, and ultimately cost real people real money.  At best, therefore, even the most cynical view of what is happening is not cost-free.  And if Republicans are not actually planning to go quietly this time, it will not end well.


David Ricardo said...

We live in a world where nothing will be decided or agreed upon until the last minute, until it has to be. The time when leaders got together and worked things out is long gone, probably never to return. So thinking about what may happen is educational, but until late September at the earliest we will not know.

On a related issue one almost hopes that Jeb Bush is elected and his tax plan that creates trillions in new debt is enacted just to watch him and the Republicans have to deal with the debt ceiling in that instance. Notice how no one, not Republicans or the Press seem to care about deficits when Republicans create them with massive tax cuts for the rich.

James mack said...

My Wife divorce me for no reason, Thanks to Dr Brave for bringing back my wife,and brought great joy to my family once again, My name is James Mack. i live in Italy, I`m happily married to a lovely and caring wife,with two kids A very big problem occurred in my family seven months ago,between me and my wife so terrible that she took the case to court for a divorce she said that she never wanted to stay with me again,and that she did not love me anymore So she packed out of my house and made me and my children passed through severe pain. I tried all my possible means to get her back,after much begging,but all to no avail and she confirmed it that she has made her decision,and she never wanted to see me again. So on one evening,as i was coming back from work,i met an old friend of mine who asked of my wife So i explained every thing to her,so she told me that the only way i can get my wife back,is to visit a spell caster,because it has really worked for her too So i never believed in spell,but i had no other choice,than to follow her advice. Then she gave me the email address of the spell caster whom she visited.(}, So the next morning,i sent a mail to the address she gave to me,and the spell caster assured me that i will get my wife back the next day what an amazing statement!! I never believed,so he spoke with me,and told me everything that i need to do. Then the next morning, So surprisingly, my wife who did not call me for the past seven {7}months,gave me a call to inform me that she was coming back So Amazing!! So that was how she came back that same day,with lots of love and joy,and she apologized for her mistake,and for the pain she caused me and my children. Then from that day,our relationship was now stronger than how it were before,by the help of a spell caster . So, i will advice you out there to kindly visit the same web site:,if you are in any condition like this,or you have any problem related to "bringing your ex back. So thanks to Dr Brave for bringing back my wife,and brought great joy to my family once again. { }, Thanks you Dr Brave, i will always be testifying about your good work.and for any questions call me {James Mack} on +393279282206.This spell is a 100% Guarantee for your situation.