The Debt Ceiling (Again)
Once again, the Federal Government is running out of money, which happens at semi-regular intervals because the way Congress spends and allocates money is objectively stupid.
by Chris Thomas
Once again, the Federal Government is running out of money, which happens at semi-regular intervals because the way Congress spends and allocates money is objectively stupid. Congress controls, through legislation, how much money we are legally obligated to pay, how much money we take in through taxes, and how much money we are allowed to borrow. This process creates predictable and unnecessary crises every time legally mandated amounts don’t add up to the same number.
One of those crises will arrive in the next few weeks.
Why Is This A Big Deal?
It’s a big deal because the United States has been using new debt to finance old debt since Alexander Hamilton established the U.S. Treasury. That revolving debt is a big part of how the government regulates interest rates, the value of the dollar, and the economy more generally. But, that also means that when the government can’t borrow, it can’t pay back its existing creditors. If that happens, it’s called a “default,” and it can trigger a chain of financial and monetary consequences that have an explosive effect on the value of the U.S. dollar.
So, it would be bad.
If the government defaults, the prices of food, gas, and nearly everything else that changes hands in the U.S. economy will skyrocket, effectively wiping out the savings of millions of Americans. That’s why, as we get closer to the limit, you’ll see shutdowns, layoffs, and other draconian cost-cutting measures: those are the last-ditch efforts to protect the government’s ability to pay its existing debts and save the dollar.
Why Do We Do This To Ourselves?
Think of it as a game of chicken. If you’re a member of Congress and disagree with the President, the debt ceiling is your friend. It allows you to manufacture a crisis that derails the President’s agenda and makes him look ineffective. That’s why nearly every debt crisis in American history has happened when different parties hold the Congress and the White House. This crisis is different in that Democrats control both branches. Still, the Senate is dysfunctional enough, and the Democratic majority in it thin enough that it amounts to the same thing.
As the crisis draws nearer, each side will attempt to paint the other as responsible for it. Democrats are at a disadvantage in this messaging war because they control both Congress and the White House. While they can argue that Republicans are filibustering efforts to raise the debt limit (and they are), the internal politics of the Senate get poor Nielson ratings, so Democrats are likely to take the blame.
All of this is made even more confusing by the fact that there are at least three significant pieces of legislation working their way through Congress right now. None of them are attached to the same bill as the debt ceiling increase. However, Republicans are betting that the Democrats won’t be able to raise the debt limit and still hold their coalition together to enact the rest of President Biden’s legislative priorities. That’s the game they’re playing: risking the full faith and credit of the U.S. government to stop wildly popular infrastructure programs like “rural broadband” and “preschool.”
Consequences be damned; that might be the intelligent, political play for the GOP. Senators Sinema (D-AZ) and Manchin (D-WV) appear to be unwilling to allow even the most tepid version of the President’s legislative agenda to advance. The New York Times reports (unconfirmed) that Sinema won’t entertain anything that raises either corporate or individual taxes at all. If the White House has to lean on either of them to raise the debt limit, it’s going to be running short on goodwill when it comes time to discuss infrastructure spending.
What’s in it for them is anyone’s guess. But both Manchin and Sinema have had banner fundraising years, and their political coffers are overflowing with cash from right and center-right donors. Neither can afford to lose the support of the center-right moderates. Manchin, in particular, has little to fear from a leftward primary challenge in West Virginia, which voted for Trump by an almost 40-point margin.
What Can I Do?
You can write to Congress. All of this is an elaborate political chess game played upon an unsteady board. We probably shouldn’t be playing it, and the stakes are incredibly high, but what matters in the short term is who Congress believes their constituents will blame for a shutdown. Your Senators and Representatives will vote based on if they’re seen as obstructionists or principled crusaders. They’ll be relying on polling data and your letters to work out how this is playing back home.
To let your Senators and Representative know how you feel about all of this, send congress to Resistbot via SMS, Facebook Messenger, or Twitter. And, if you want to support the ‘bot and explainers like this, maybe throw a few bucks our way; every little bit helps to keep the servers running.