The Republicans Have No Workable Plan for the Debt Ceiling

The Washington Post headline is direct enough: White House without a plan to address debt ceiling. The debt ceiling may be far from the sexiest news item available to write about right now, but it’s important enough that it should be getting a lot more attention. If the ceiling is not raised in the relatively near future, probably by some time in September at the latest, the country will be unable to pay all its debts and our credit rating will collapse. Given the centrality of U.S. debt to the global economy, this could trigger a worldwide economic contraction or depression. If that doesn’t concern you, it’s also possible that some benefits programs will have to suspend their payments, meaning our most vulnerable citizens will be put at risk.

Raising the ceiling is theoretically simple. All it requires is a brief bill that authorizes the government to issue more debt. It’s been done in the past too many times to count, and usually without a ton of fanfare or controversy. During the Obama Era, however, the Republicans got it in their head that they could force the Democratic president to accept cuts he would otherwise veto by threatening to blow up the global economy. They concocted a variety of risibly false talking points to go along with this strategy, including that it was really about concern for the level of borrowing rather than resistance to how the money was spent, and a feigned reassurance that nothing too bad would result even if we did default.

Unfortunately for Trump, a lot of Republicans began to believe these talking points and now there are a lot of congresspeople who won’t raise the debt ceiling for him without getting concessions on spending as well as on other extraneous concerns.

One difference between now and the Obama years is that the Republicans are no longer dealing with a Democratic president. They don’t need to use this strong-arm tactic to shape or influence the budget. They also can’t necessarily depend on Democrats anymore in the minority to provide the lion’s share of votes for raising the debt ceiling. In essence, they’ve gone from blackmailing their political opponents to blackmailing themselves. Previously, the Democrats called in vain for a “clean” debt ceiling bill which meant both that it would raise the ceiling without making specific cuts but also that otherwise unpassable and unpopular legislation wouldn’t be attached to the must-pass bill.

This time around, it’s Treasury Secretary Steve Mnuchin who is requesting a “clean” bill. Yet, he is being contradicted by the director of the Office of Management and Budget, Mick Mulvaney, who wants to use the crisis to lock in cuts. Basically, Mulvaney is asking Congress to hold a gun to his own head.

The problem is that since the administration is divided they cannot come up with a coherent plan for getting the debt ceiling hike passed.

The White House budget director suggested in an interview Thursday with reporters that neither the Trump administration nor Capitol Hill lawmakers have set their terms for an agreement.

“It’s fair to say we haven’t settled on a final way to address the debt ceiling any more than the Hill has,” Mulvaney said…

…Mulvaney suggested he would like to have any increase in the borrowing authority be attached to other spending changes, a move that could attract Republican support but alienate Senate Democrats. President Donald Trump’s budget proposal seeks to beef up spending on the military and border security while cutting many social programs.

Treasury Secretary Steve Mnuchin has indicated he would like a “clean” bill to raise the debt ceiling, so it would not have to be tied to any spending changes, but Capitol Hill conservatives are resisting the idea…

…Mulvaney said Mnuchin would ultimately be in charge of handling the debt ceiling push “once we do settle on our formal policy, if we do.”

It’s remarkable that Mulvaney cannot even express confidence that the administration will eventually settle on a formal policy or strategy for raising the debt ceiling. All he can say is that “if they do” arrive at a strategy, the Treasury Secretary will be the main salesman for the plan.

Meanwhile, the folks who began to believe their own talking points are going to be a problem:

“Secretary Mnuchin believes it needs to be clean. I think the vast majority of the Republican conferences would not agree,” said Rep. Mark Meadows R-N.C., chairman of the Freedom Caucus, a group of strongly conservative House Republicans.

The Democrats are still incensed by how the Republicans behaved during Obama’s presidency and they do not want to provide most of the votes for raising the debt ceiling anymore now that they don’t control any lever of government. They might be willing to do it just because it’s the right thing to do, but not if it requires them to vote for a bill that isn’t clean. Secretary Mnuchin understands this, but that doesn’t mean that he will be persuasive.

This is why there’s a real threat that the Republicans won’t be able to pass the hike in time to avoid a downgrade in the nation’s credit rating or, even worse, a default that causes an international cascade of economic chaos and job loss.

There isn’t all that much time left to figure this out, especially because there is a long August recess scheduled for Congress. Currently, there’s no agreement about how to proceed between congressional Republicans and the administration, or even within the administration itself. The president is obviously distracted and clueless. So, I guess we should start preparing for the worst.

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