The State of Play on the Debt Ceiling

The debt ceiling, we are told, will be breached in late September if Congress doesn’t raise it.┬╣ This would spawn widespread havoc because it would cause the US government to stop paying some of its bills. Most likely, interest payments on treasury bonds would be prioritized, which means there wouldn’t be a default on American sovereign debt, but it’s not clear if much more could be done on that score. As a result, Social Security checks could be delayed randomly, payroll checks to federal workers might be held up, and doctors would stop getting Medicare reimbursements.

So where are we on this? This seems to be the current state of play:

  • In the executive branch: After several months of vagueness, the White House finally announced that it supports a “clean” increase. That is, an increase in the debt ceiling with no conditions attached.
  • In the House: The House Freedom Caucus is insisting that it won’t vote for a debt ceiling increase unless it includes spending cuts. Without the HFC, Paul Ryan doesn’t have the votes to pass anything.
  • In the Senate: The debt ceiling bill needs 60 votes, which means that Mitch McConnell needs a bunch of Democrats to help him out. Democrats haven’t taken a firm position yet, but are generally suggesting that they don’t want to raise the debt ceiling if it just means Republicans can pass a huge tax cut for the rich. McConnell didn’t improve matters when he churlishly announced last week that he wanted no Democratic input on the upcoming tax bill.

Now, it’s possible that none of this matters. In recent years it’s become SOP to dick around on the debt ceiling for months and then come to some kind of last-minute accommodation around 10 pm on the day the money runs out. Maybe that’s just the way things are these days, and we have to get used to it.

For what it’s worth, though, I hope Democrats stay sort of vague about all this and don’t start holding hostages. If they just want to give Mitch McConnell ulcers for a few weeks, who can blame them? But when push comes to shove, they need to be the party of grownups, the ones who will approve a clean debt ceiling increase even when a Republican is in office. One party of lunatic hostage takers is enough.

┬╣Technically, it’s already been breached. However, for the past few months the Treasury Department has been using “extraordinary measures” to keep paying the bills, something we never had to do in the past. These days, Congress doesn’t deal with the debt ceiling until even the extraordinary measures have run out and doom is truly only hours away.

It’s sort of like the gas tank in your car. In the past, Congress filled up whenever the dashboard light came on. Crisis averted! But now they just laugh at the light. They don’t even start to take things seriously until the tank is down to about two ounces of gasoline and the fuel pump is sucking so much wind that it nearly melts.