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WPCNR NEWS & COMMENT. Reprinted from The Delray Democrat, (Delray Beach, Florida) with Permission. June 4, 2023: (The bill to avoid default was passed by both houses of congress last week)
There are three things to know about the debt ceiling “crisis”:
(1) every penny of the $31.4 trillion of debt we will exceed on June 5 was
authorized by prior Congresses in legislation signed by prior presidents;
raising the debt ceiling is thus not a subject for negotiation but rather a
question of whether Republicans will welch on our country’s debts;
(2) before Newt Gingrich became Speaker in 1995, the ceiling was raised
more than 100 times, always without attendant drama; and
(3) since then, it has morphed into a crisis every time a Democrat occupied
the Oval Office and never when a Republican was president.
In 1995-96 and in 2013, Republicans’ phony hysteria about the debt caused
government shutdowns. In 2011, it caused S&P to downgrade the U.S. credit
rating for the first time in history because the ceiling wasn’t raised until days
before the government defaulted. This time Moody’s, Fitch, and Scopes
Ratings may join in a downgrade, costing the United States Treasury hundreds
of billions of dollars annually.
Republicans recover from their deficit hysteria whenever a Republican is in the White House.
Democrats have always acted responsibly without preconditions to protect the governmen
from a default.
That’s why the debt ceiling was raised without dramatics or demands when Reagan, the two Bushes,
and Trump was president, even when Democrats controlled Congress wholly or
in part. For example, Democrats joined with Republicans to raise the debt
ceiling without controversy or pre-conditions:
• 18 times when Ronald Reagan was president (even as he was tripling
the federal debt);
• 9 times while George W. Bush was doubling it (despite having inherited
three straight annual budget surpluses from Bill Clinton, the first
surpluses since 1969); and
• 3 times while Donald Trump was adding almost as much debt in four
years ($8.2 trillion) as Obama added in eight ($8.3 trillion), even
though Obama inherited the worst economic crisis since the Great
Depression and bequeathed Trump the longest expansion since World
War II.
No serious person could believe that Republicans are actually concerned with
the federal debt, nor can anyone doubt that Republicans are once again putting
the full faith and credit of the United States in jeopardy in order to achieve what
they could never have achieved through normal legislative channels. The polite
word for that is “blackmail.”
A less polite characterization is “political terrorism.” Republicans, with a slim and
fractured majority in a single House of Congress, are demanding steep spending
cuts and a rollback of some of President Joe Biden’s legislative accomplishments,
just as they did when Obama was president.
If Biden refuses to pay the ransom, Republicans are
prepared to create the first government default in
U.S. history. The immediate impact would be a
downgrading of the U.S. credit rating, the loss of one
million jobs, and a recession. A continued refusal by
Congress to raise the debt ceiling would result in the
loss of 7 million jobs and a 2008-style financial
crisis.
The Republican debt reduction plan, which passed
by a mere two votes, contains two principal
measures. The first would cause a recession and
further afflict the most vulnerable among us. The
second would further accelerate our reckless march
into a climate catastrophe.
The proposal contains no measures to reduce the
debt by increasing taxes or by reversing the Trump
“tax cuts” that added nearly $2 trillion to the federal
debt. Republicans don’t care that a substantial
majority of Americans (61% in the most recent poll)
favor raising tax rates for households that make more
than $400,000.
Two-thirds of the claimed reduction in spending
would be achieved by cuts in discretionary spending
(which is divided between defense spending and
safety net spending other than Social Security and
Medicare). The Republican plan cuts discretionary
spending by 9% from the current fiscal year, with
subsequent increases of 1% annually. Such cutbacks
would almost certainly tip the country into the
recession that “experts” have been predicting for
months would result from the Fed’s ten interest rate
increases over the last 14 months. Since Republicans
are on record as opposing any cuts to the Pentagon
budget, and the military accounts for the majority of
discretionary spending, it is our most vulnerable
populations will bear the brunt of the pain.
The plan also seeks to denude President Biden’s
Inflation Reduction Act, the most consequential
governmental response to the climate crisis ever
enacted. That’s hardly surprising, as the bill targets
the Republican Party’s principal paymasters—
plutocrats and polluters.
The bill, which includes tax credits designed to boost
production and consumption of green energy, is
estimated to have created 142,000 new fair-wage,
clean energy jobs already and is projected to create a
total of least 1.3 million jobs by 2030. That’s good
for the economy and the planet but not so good for
the filthy fuel industry.
The Act also includes $80 billion in IRS funding
designed to help recover taxes owed but not paid by
the wealthiest Americans and multinational
corporations. Although it will have negligible impact
on most Americans, it increases the likelihood that
the Republicans true constituency (the top 0.01%)
will begin to contribute their fair share.
The Republican proposal includes eliminating most
of the green energy tax credits as well the enhanced
IRS funding. It also requires Biden to agree to
legislation that would increase domestic production
of oil, natural gas and coal, and cut back on
permitting restrictions that delay pipelines, refineries,
and other filthy fuel projects.
If Biden refuses to accede to these demands,
Republicans are ready, willing, and able to
precipitate the first government default in American
history.
Yet the price of acceding to Republican blackmail
would be a continuation of our reckless lurch into a
climate disaster from which there would be no
recovery. It would also slow the economy and tip the
country into the recession that “experts” have been
predicting for months.
There are reports of a deal that would focus solely on
cutting discretionary spending, but it’s unlikely the
Orwellian-titled Freedom Caucus – whose members
make the Tea Party seem like well-mannered guests
at a Victorian tea party – will agree to that. (They did not.)
Even if they do, and as noted above, it will be the
most vulnerable Americans who bear the brunt. Plus
ça change, plus c’est la même chose.
(Editor’s Note:
Both houses of congress passed the bill by 2 to 1 margins
Default averted.)
