Several days ago in WaPo, Catherine Rampell published a highly reasonable column calling for eliminating the century-old US debt ceiling, something no other nation has ever had, a position supported by a wide array of economists including such a conservative GOP stalwart as the recently deceased Martin Feldstein, a former CEA Chair for Reagan. I have made numerous posts here on this in the past, but the issue is hot again as once again the debt ceiling is being rapidly approached.
The latest story is that the “adults in the room,” Treasury Secretary Steven Mnuchin and Speaker of the House Nancy Pelosi, may be very near an agreement to raise the debt ceiling, Reportedly Pelosi has been open to eliminating the ceiling, but in the current circumstances I certainly understand why she might be wanting to secure a two year agreement to preserve funding for social safety programs crazy right wingers want to use the debt ceiling issue to trash as well as holding off any shutdowns this fall. This is what used to be known as “good government,” but in the current environment, even this apparently reasonable deal, which also has no non-economic sideshows involving abortion or whatever, may yet not pass. Pelosi says it must be agreed to by tomorrow evening if it will get passed properly by Congress before they all go on leave and the government might run out of money in early September (corporate tax payments have been way down due to Trump tax law). Eliminating the ceiling would avoid all this bs, but this is not the moment for that.
This is definitely a weird and unprecedented situation. For over a century we have had this completely indefensible debt ceiling, which has been raised so many times it is not worth counting, and when the WH and Congress have been controlled by the same party, it has been no big deal, although obviously that is what we need to get rid of the damned thing. However, historically, when there has been split partisan control the game has been the WH pushing raising the ceiling while the opposition party in Congress has made lots of complaining noises and often made demands for raising it. The problem this time is that the major power broker of the administration, Acting Chief of Staff Mulvaney, was part of the tea party fanatics in the House who when Obama was prez tried to block raising the ceiling. Apparently at times he and Trump have indulged in fantasies that if there is a default he could personally control which agencies get funded and which do not. This is not true, and maybe they are figuring it out, but Mulvaney has said nothing, and Trump must pass on this.
If he messes up the deal, it will be all his fault, as his own Treasury Secretary has cut it with the Congressional leader of the opposition party in the House, with reportedly the toadish GOP-controlled Senate ready to go along. He may or may not have figured out that triggering a shutdown did not help him, but if he thinks triggering a default will not be worse, this will be a big mistake, to put it mildly.
Barkley Rosser
Adults in the Room is the title of a book by Yanis Varoufakis about the Greek economy and the World Bank.
I think it should be better understood by those who talk about “economics.”
might help explain the clown show in Washington. not to mention Brussels.
I really wish all the governmental combatants involved would read Section 4 of the 14th Amendment.
JackD
I wish the people who cite articles not present would at least give enough of a summary to suggest why they might be worth looking up. A famous writer in the middle of the last last century stated that an essay must contain within itself everything necessary for its understanding. He was right. But then we got the new days.
So why didn’t I say more about Varoufakis? probably because i couldn’t think of an adequate summary. Adults in the Room was about his experiences as Greek economic minister trying to negotiate with EU and european bank to provide meaningful debt relief and easing of austerity Greece could actually recover from its debt. Sort of like what bankruptcy used to be for, before it became another way to impose debt slavery on the debtor.
The United States has done pretty well through history by paying its debts.
And by Congress controlling the purse as a check on the President. But we began some time ago electing politicians who didn’t give a damn about the Constitution (I know, they all say that about the other guy) and now we have Democrats who don’t have the courage to call abusing “emergency powers” to run around the Constitution an impeachable offense.
Dale, as I’m sure you know (now if not before), the section in question prohibits the questioning of debts properly incurred by the federal government. Like, for example, imposing an after the fact debt ceiling. The time for limiting expenditures is at the time of appropriations. I apologize for not saying all of that in my original post. I have said it before here, but, oh, well.
JackD
Certainly no need to apologize. I was just asserting one of my pet peeves about what the web has done to writing.
i did know about the questioning of debts. i am not sure that applies here, but i may very well be wrong. in the first place, but maybe not related, is the fact that “paying our debts” is not the same as “reducing the debt.”
paying your debts is what responsible people and businesses do except for geniuses like trump. reducing your debt may be silly, especially for a country. i’ll leave the details for people to argue who don’t see why yet.
i think the clause in the fourteenth is not violated by a debt ceiling (which i think is a silly idea maintained by the political advantage each side can wring out of it.) imposing a debt ceiling does not mean not paying past bills. it doesn’t even mean not running up new bills… as long as you pay off an equal amount of old bills.
but i agree that the debt debate is conducted in terms that are bad economics. all a clown show for the still-huddled masses.
Reportedly Pelosi and Mnuchin have reached an agreement that Trump is willing to accept, although some right wing GOPsters are apparently still trying to get Trump to change his mind. However, between the race conrroversies and the danger of war in Iran, I suspect Trump may want to have this off the table. So, maybe we have missed the default bullet for now.
But it would still be better to just eliminate the darned debt ceiling.
Dale, if the debt ceiling means what you say, why does its periodic appearance cause warnings of U.S. government default? That’s not a sarcastic question. I really don’t understand it.
JackD
I’d have to guess it’s either part of the scam or the people giving the warnings aren’t in on the scam so they worry about default.
i certainly don’t know how a default on US debt would/could occur, but I can’t see how extending or not extending a debt ceiling would by itself cause default. we still collect taxes, we still print money. we pay the already incurred debts that come due out of current taxes, or new taxes without incurring additional debt.
so i guess i don’t see that as a problem. not that i favor a debt ceiling. not that i favor more debt. didn’t think much of the tax cuts. don’t think much of increases in defense spending. don’t like the deficit hawks or debt screamers …
but surely, if you have a debt ceiling all you have to do is raise taxes or cut spending and you can certainly avoid default.
excessive debt may be a problem or insufficient or misdirected spending may be a problem… but the debt ceiling or not is not a problem. it’s just a clown show.
Rosser
i don’t think trump minds spending money. i don’t think he would mind spending it on a war.
the racism war and the iran war are his own creations. i don’t think the debt ceiling is a real fight, its just a way to create a “win-win” for both parties while increasing spending but not spending it on anything that will help people.
Dale, perhaps you’ve hit on the problem. Congress is unwilling to raise taxes or cut spending.
not so much unwilling as needing to appear unwilling.