If I understand it correctly, the last time we had to raise the debt ceiling, the Republicans balked and decided to merely suspend the requirement that we operate with a debt ceiling. That suspension has sunsetted as of May 19th. Treasury Secretary Lew announced that he would implement the “standard set of extraordinary measures” to avoid defaulting on our debt.

On Friday, the Treasury stopped issuing State and Local Government Series securities (SLGS). State and local governments buy the securities as they work to refund municipal bond deals. Issuing those securities takes up space under the debt limit.

The Treasury also has the power to halt new investments in federal employee retirement funds, which would be reimbursed once the limit is hiked. It also can stop reinvesting in its Exchange Stabilization Fund used to buy and sell foreign currencies. All these moves can free up billions of dollars the government can use to meet critical bills, and give Washington time to strike a debt-limit compromise.

This is just how we operate now, like a Banana Republic. However, there has been a little wrinkle in the Republicans’ plans. They thought we’d be out of money this summer and they would be able to force another hostage crisis over the debt ceiling to extract concessions on the budget. But then we ran a $113 billion surplus in April, and now Secretary Lew assures Congress that we can make it past Labor Day without defaulting on our debts.

With their hostage-taking plans in ruins, Republican senators began cannibalizing each other on the Senate floor yesterday. To understand what was going on requires some explanation.

The way the budget process is supposed to work is that both the House and the Senate pass a budget in the spring. They reconcile their two budgets into one budget. Then the responsible committees figure out how they are going to spend the money they have been allotted. Appropriations bills are drafted in the late summer and early fall. And then those bills are passed in each house, and reconciled with each other and passed again. That’s how it is supposed to work, but it’s been a while since things actually worked out that way.

Strictly speaking, there is no requirement that Congress pass a budget, and they haven’t agreed to one in recent years. While the House has passed a serious of Paul Ryan budgets, the Senate hasn’t bothered to pass anything or make any attempt to reconcile their priorities with Ryan’s.

The Senate’s failure to pass a budget became a rallying cry for conservatives who kept complaining that the Democrats were not using “regular order” to work on the budget. So, this year, the Senate Democrats finally decided that they would pass a budget. They accomplished that 59 days ago.

The next step is supposed to be the selection of conferees to serve on a Conference Committee. That’s what is called “regular order.” The House and Senate select their conferees, and then the Conference Committee hammers out a compromise. Yet, it appears that in passing a budget, the Senate Democrats have called some kind of bluff, because the Republicans absolutely refuse to allow the selection of conferees.

Senator Ted Cruz of Texas has a conspiracy theory that the Democrats will use the Conference Committee to get rid of the debt ceiling. John McCain thinks he is an idiot.

On the other side, Sens. John McCain (R-Ariz.) and Susan Collins (R-Maine.) questioned that argument, noting that Democrats couldn’t do anything in conference without the approval of the House — which, McCain said, “happens to be a majority of our party.”

“So we don’t trust the majority party on the other side of the [Capitol] to come to conference and not hold to the fiscal discipline that we want to see happen? Isn’t that a little bit bizarre?” McCain said.

McCain and Collins also argued that the stall tactics look ridiculous after months of GOP complaints about the refusal by Senate Democrats to adopt a budget. The first Senate budget in three years won approval 59 days ago, and Republicans have been dragging their feet every since.

“What are we on my side of the aisle doing?” demanded McCain.

Since the budget is really nothing more than a blueprint for making appropriations decisions, it’s a worthless document if it isn’t passed in the spring because the fiscal year ends on September 30th. The Republicans can’t get concessions on the budget by refusing to lift the debt ceiling if the debt ceiling won’t become a crisis until early September.

What’s actually happening is a freak-out on the conservative side because circumstances have conspired against them.

No one expects budget negotiations to go smoothly. House Budget Committee Chairman Paul Ryan (R-Wis.) has said he views the debt limit deadline as critical to forcing an agreement. But that deadline has now been pushed to well after Labor Day.

In recent conversations with reporters, Collins has called the stall tactics “absurd;” McCain called them “insane” and “incomprehensible.”

Here’s how Steve Benen describes the situation:

Congressional Republicans made a series of assumptions, all of which have turned out to be wrong. They assumed Senate Democrats couldn’t pass a budget. They assumed Democrats wouldn’t want a budget process considered under regular order. And they assumed the budget talks, if they occurred, would happen around the same time as the need for a debt-ceiling increase.

GOP lawmakers were terribly disappointed, then, to see Senate Democrats do exactly what they were asked to do, and the economy improved quickly enough to push off the debt-limit deadline until fall.

But with their plans foiled, Republicans are stuck with no Plan B, no leverage, and no credible threat.

Part of the problem involves the House rules. If the Conference Committee were to convene, and if it were unable to come to an agreement after 20 days, then members of the House (including Democrats) could begin initiating votes on “instructing the conferees.” And that would spell the end of any semblance of leadership control over the budget process.

Another part of the problem is that having a public conference committee would force the Republicans to show their intransigence on taxing the wealthy and their insistence on slashing popular programs and entitlements. Their positions have a surface level of support with a large segment of the public, but that support evaporates when it becomes concrete. To get the kind of cuts they want, they need a Grand Bargain because they need to be able to blame the Democrats for complicity in the unpopular parts of the budget. They won’t be able to do that if they use regular order.

So, here we are. The Republicans don’t know what to do. They are fighting each other. The conservatives have stopped making sense even to John McCain.

“What are we on my side of the aisle doing? We don’t want a budget unless we put requirements on the conferees that are absolutely out of line and unprecedented,” McCain said. “So all I say to my colleagues is, can’t we after all those hours – I forgot what hour in the morning it was – after all those votes, after all that debate, after all that discussion and we came up with a budget and now we won’t go to conference. Why is that?”

It’s because they’re crazy and incompetent.