Nuclear Economic Foosball
A couple of weeks ago, Senate Majority Turtle Mitch McConnell threatened to cancel all vacations if a repeal to Obamacare wasn’t passed prior to the August recess. With his best spinster schoolmarm scowl, he threatened to cancel recess unless the Senate passed this test.
McCain: School’s Out For Summer, Mitches!
But vacation is back on, next week, after the recent series of votes went no better than the prior series: repeal this summer is as dead as a coffin doornail, except inside the ego-bloated head of the PeeResident and amongst his nuttier fart-catchers. With more petulance than panache, Dat Guy is insisting that no other bills be considered until healthcare is addressed.
If they listen to him, the Republicans risk a simultaneous government shutdown, global economic meltdown, and Constitutional crisis showdown: the debt ceiling looms!
It used to be, in olden times, that for every spending bill Congress passed, they would have to authorize the Treasury to incur the debt to pay for it. This cumbersome process was streamlined during WWI, when they implemented a block authorization to incur debt, up to a pre-set limit: the debt ceiling. From time to time, Congress increases the limit on federal borrowing which is, after all, merely the vehicle to fund what Congress has already voted to spend. The first time it was politically leveraged was when Congress was trying to rein in Eisenhower’s crazy spending on interstate highways.
Thanks, Ike! Now, about that SPEED limit…
Since 1960, the limit has been raised 78 times, mostly without incident. Recently, however, Teapublicans have tried to hold hostage the full faith and credit of the United States, otherwise guaranteed by the 14th Amendment, in order to festoon a normal housekeeping bill with a garland of garbage advancing their Fuck-The-Poors (aka “austerity”) agenda. They have blurred the line between incurring an obligation (the budget) and honoring an obligation (the debt), and a credulous public, a complicit right wing, and a corpulent clod of a President have bought right into the nonsense that the debt ceiling is an ideological piñata, instead of a landmine.
As we discussed here and here, there is (yet another) fight within the Drumpf malAdministration over what to do. Treasury Secretary Steve Mnuchin, of the Goldman Sachs wing of the White House, has said from the start that a clean debt ceiling should be passed. Just this week, Mnuchin met with McConnell and Minority Leader Chuck Schumer to discuss exactly that.
But Mick Mulvaney, Director of Drumpf’s Office of Management and Budget, has always been a part of the blow-it-up, burn-it-down school of governing. He voted against the ceiling four times in Congress, has advocated conditioning a raise on more draconian cuts, and just this weekend he pushed IMPOTUS’s view that NOTHING should be done by Congress until Obamacare is repealed, ESPECIALLY the debt ceiling.
Mulvaney and Trump, for two
How will this all come down? As usual, Sarah Huckabee Sanders is no help: “To ensure that we have robust economic growth and promote fiscal discipline, the Trump administration believes it’s important to raise the debt ceiling as soon as possible,” she said Tuesday. “Fiscal discipline,” seems to imply that it won’t be a clean raise. “Robust economic growth” is a chimera: the debt ceiling will avoid a robust economic meltdown.
So, where do we stand with all this? In July, Mnuchin continued the “extraordinary measures,” begun in March, of underfunding pensions to fund everything else. This will get us into September at which point he can use some incoming tax proceeds to get us a little further, but only a few weeks. Sometime this fall, unless the debt ceiling is raised, the United States will go into default of its obligations, precipitating a global financial megaquake.
Or other, similar, disaster metaphor.
There is some hope. Along with his being a criminal, the healthcare fiasco has left Dat Guy damaged and impotent. He is unable to impose his will on a Republican Congress which is coming to realize that his bark is laughable and his bite is negligible. There are still enough ideological idiots and Reich Wing Nutjobs who heil him, and may try to muddy up the bill. But between the Democrats, and the handful of sane, safe Republicans who agree with Mnuchin, it’s likely a clean debt ceiling will pass. There’s not enough time for anything else.
Consider: The House is already on break, with the Senate planning to join them sometime in the next week. That lasts until after Labor Day, when they return to a full slate of legislation, including the budget itself. But first, Republicans want to “hard pivot” to tax “reform,” which means even less money coming in. All of this requires serious, time-consuming work, and there are many thorny issues still to resolve. If you added a contentious debt ceiling bill to that mix…? In Congress, there’s very little will, or time, or political capital, or even inclination, to conspire with Donnie Dorko as he plays nuclear foosball with the world economy.
What a Foos Believes… no wise man has the power to reason away
We’ve lost our position as the avatar of democracy. We’ve lost our position as the beacon of freedom. We”ve lost our position as the leader of the free world. All we have left is our position as the anchor for the global economy. We can fix all the rest with a single election, but destroy the full faith and credit of the United States of America?
That’s gonna leave a mark.
UPDATE: It seems as though Mick Mulvaney may now be singing from the “clean debt ceiling” hymnal. This could be the CoS Kelly Effect, combined with a realization that they can’t afford any more flaming legislative shitburgers they don’t have the votes for. Or maybe it’s just another plot shift in the ongoing saga that is the internal WH Goldman Sachs vs Goon Squad feud.
Or maybe he just read this column. In any event, it remains to be seen if the Freedom Caucus, Trump’s Base, and Fox & Friends provoke another Twitstorm policy change.
Primo, you continue to impress me.
1“With more petulance than panache”indeed. Yesterday, when we heard Donnie had signed the Russian sanctions into law, I wondered why it took him so long. It had passed with overwhelming support. No chance of successful veto. Apparently he had his minions frantically searching for something, anything he could use to torpedo this excuse for Putin publish the Russian prostitution urination video. Luckily for me the main image that came to mind was Donnie in a high chair with a bib on, mouth clamped shut. Turning his head away every time someone tried to feed him his vegetables.
2I have read an article, but cannot remember the author or the publication, which suggests very strongly that Congress will get the money it needs by raiding the coffers of the Social Security system. Primo, if you are familiar with that argument, or know where to find it, bring us up to date. It scares the shit out of me that Republicans may actually do it. The other option for
3Republicans which is equally scary, is to default on US Savings Bonds.
George in the LC:
I’m not familiar with that exact argument, per se, but I am familiar with a variant.
First, if the debt ceiling fails to pass OR the budget process fails without a continuing resolution, the government shuts down and Social Security checks stop coming, period.
A couple of months back, Mulvaney executed a bit of a misdirection play on the whole “full faith and credit” riff by “reassuring” investors that if money got tight, those holding treasury securities would be prioritized to be paid first. The rest of the government could shut down – which again means no SocSec payments – but it’s still a default.
Further confusing things: SocSec is ALSO invested in T-bills – technically, they’ve ALREADY borrowed the SocSec money – so could he also mean that THOSE T-bills are okay to delay on?
Hard to say, but the gist is there is no such thing as a partial default: once you screw just a little bit with “Full faith and credit,” you can’t revirginize it.
Additionally, there are other gov’t pension funds that they CAN shortchange, in the near term, as I discussed in my other columns linked above, but those are what we’re CURRENTLY raiding, and are part of what are called “extraordinary measures.”
What you heard may have been a variant of the above – the “prioritization” argument has been around since the 2011 debt ceiling imbroglio.
But the ceiling applies to intra-government and external debt, both. “Failing” on the first (incl SocSec) but not the second is a distinction without a difference. Only Magical Thinking can discern otherwise.
4Wait; I thought that McConnell was going to keep the Senate technically in session, instead of recessing. Though everybody still leaves town for several weeks.
Because they’re afraid that otherwise, Trump will fire their buddy Jeff Sessions, and interim appoint another AG, who will then fire Mueller.
Any news on that?
What a Fustercluck ShiteShow!
5Republicans Cannot Govern.
Write that down. Make a note of it. It’s the only answer to all of this “why-are-they-doing-that?” hand-wringing that is ceasely going on right now. They just can’t govern. End of story.
6It used to be that whenever the Senate went out on hiatus, one member would show up regularly on the Senate floor, call an empty chamber to oder, blather a bit, whack the gavel on something and then adjourn. This was supposed to prevent recess appointments. Actually it always impressed me as being to very oddly funny and clunky to be effective. As for Social Security, if you recall during the last government shutdown via Ted Cruz, all Social Security recipients were assured that the checks would still go out. I know I got mine.
7Update; led by Lisa Murkowski, the Senate did adjourn without going into recess.
JAKvirginia:
It’s not that the GOP is incapable of governing – at least most of them. It’s that no one could possibly take the mouldering straw of their ridiculous promises and transform it into the gold of executable policies. They promise more and better jobs, for example, but without doing anything to curtail companies from moving their operations overseas, or providing funding for educational or vocational training programs. Or even raising the minimum wage.
But we’re all familiar with the too-obvious cognitive dissonance between the GOP’s stated goals and values, and the legislation that they actually support. Hopefully, if we survive the nightmare that is Trump, a lot more to our fellow citizens are aware, too, and willing to act on that knowledge and demand better from our lawmakers.
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