By Steve BermanPresident Joe Biden is unpopular. He has been unpopular since he botched our exit from Afghanistan, which seems so long ago that it happened in a different decade. Possibly the only Democrat more unpopular than Biden is his own Vice President and running made, Kamala Harris—at least since Krysten Sinema left the party.
Not to be outdone, because it’s clearly unacceptable to be in third place behind Donald Trump (who just lost $5 million in a jury trial for sexually assaulting an advice columnist 27 years ago) and George Santos (who has now been charged by federal prosecutors, who lined up blindfolded to pick his crimes out of a fishbowl) congressional Republicans are doing the “hold my Bud Light” routine with the debt limit.
It’s another debt ceiling crisis, which is now becoming more familiar than the death ofTwitter or fake Russian protesters in Europe. I won’t bore you with the details, because they surface every time we go through this exercise. The TL;DR version is that if the Treasury can’t take on new debt, then every penny the government has must go to paying current bondholders, leaving very little to pay for, you know, running the federal government, which is quite large and hungry like a baby Thanos.
Yes, there are esoteric “solutions” that involve the 14th Amendment, a $1 trillion platinum coin, or using gold. Fortunately, Treasury Secretary Janet Yellen is not an idiot. She had in January told a foreign leader in Africa that the U.S. Treasury’s systems weren’t set up to give priority to bondholder payments if the government exceeds its spending limit. The limit is set by Congress, and it’s Congress’s job to fix it.
If Congress doesn’t fix it, then many people are going to be missing their government checks, because the Treasury will, by law, not be able to write them. In the business world, when an organization fails to pay its obligations, it’s called default, which then leads lenders and shareholders to closely examine the books of the defaulting party. This typically exposes the source of illiquidity, usually insolvency—the organization’s assets can’t cover its debts. The technical term for this situation is “bankruptcy.” Now, we know the United States can’t go bankrupt, but the party that caused the liquidity crisis can, politically speaking, find itself flirting with bankruptcy.
Now it’s rare for me to take the side of Democrats, mostly because they can be just as insane as a werewolf during a full moon, but I agree with them on the debt limit. Congress just needs to get rid of it. There’s no advantage to Congress continually setting higher and higher limits (it’s now $31,381,000,000,000—that’s 31 followed by trillions), while increasing spending more and more without paying for it through taxes and fees. In fact, having the debt limit is simply a political punching bag for Republicans to campaign about, so they can raise money from easy marks who respond to spam texts.
This isn’t the first time Republicans played this stupid game.
In 2011, the U.S. came within days—hours—of hitting the debt limit, which caused Standard & Poor’s to downgrade our credit rating from AAA (which it had been since such ratings existed) to AA+, a stunning rebuke to Congress. Despite Senate Minority Leader Mitch McConnell (yes, it’s Deja Vu) and then-Speaker John Boehner putting in the last-minute efforts to “ransom” the debt limit, holding it hostage in the first place didn’t work out well for Republicans.
The credit downgrade harmed stock markets around the world. China used the opportunity to question the use of the dollar as the world’s reserve currency, and everyone blamed Republicans. Despite the fact that President Barack Obama’s approval rating dropped to 40 percent because of the crisis, Republicans lost 8 points in approval ratings, dropping to 33 percent.
President Joe Biden’s approval rating is down to 42.6 percent according to Five Thirty Eight’s tracker. Gov. Ron DeSantis is running 42.9 percent, without having declared his candidacy. Trump is at 38.6 percent. Yet Trump beats DeSantis by 30 or 40 points in every primary poll; and even beats Biden in some general election polls. This goes a long way toward proving that the electorate is in the mood to troll America, or perhaps Republican voters have just given up on sanity and are content to sink into a drug-induced comfortable numbness.
But when Republicans mess with the debt limit, that changes the game.
People remember government shutdowns and who caused them. In 2013, when Tea Partiers led by Sen. Ted Cruz played chicken with Obama, they took huge damage. Americans have little patience for politicians playing chicken with their money and their 401(k) funds to make some point about government spending is out of control. Congress controls government spending, so Congress it out of control. Congress is mostly comprised of people whose primary goal in life is to be re-elected, so they shower their constituents with government money, which is raised by fees and tariffs, taxes, or debt. There’s literally no other way for the government to make money. When Congress spends, it’s spending other people’s tax dollars, or borrowing.
Cutting off the debt to complain about spending won’t generate outrage with voters about the spending. It will generate outrage about not getting Uncle Sam’s money for their pet projects, entitlements, T-bills and all the other stuff that will grind to a halt.
Of course, market analysts like Bill Gross of Pacific Investment Management Co., told Bloomberg, “it’s ridiculous. It always gets resolved.”
Until it doesn’t.
Going one day past the deadline will cause a lot of damage, but that damage will be mostly to Republicans. The media will relentlessly shove microphones in the faces of every Republican, including those running or planning to run for president. And Donald Trump will say something galactically stupid about it, spewing his deep unpopularity over the entire party like Tinker Bell’s fairy dust, but instead of making everyone fly, it causes them to slam into the earth as if gravity itself multiplied to solar mass. But the unpopular Trump eats hate, so his polling won’t be affected.
The good thing, the fair thing, the brain-cell-gifted thing, is for Congress to remove the debt limit completely. If Republicans cared about spending, they’d reduce spending instead of embarking on Baccanalian cash orgies worthy of Imelda Marcos gliding through Civitanova Marche, her servants constantly shoveling shoes into the trailer of an Astra HD9 as she wears the numbers off her American Express Black Card.
Republicans forget how quickly ‘Murican voters—their voters, the ones who live between the headwaters of the Tennessee River and the I-5—turn on the hands that feed them when those hands take away the treats, even for a few days.
Those same voters would forget about removing the nasty old debt limit within a week of the vote that did it, and best of all, they can blame it all on Democrats! Once the debt limit is gone, Republicans who truly care about out of control spending can vote for less spending (but most won’t).
I know Bill Gross and other analysts are probably right: Congress will fix the debt limit in another short-sighted deal with a bunch of pork and beans amendments attached, just in time to avoid Armageddon. Only to kick the can down the road another few months. I actually hope they don’t. I hope Democrats poison the well so hard that Republicans are forced into letting the government go bust for a few days.
Then we get to see what happens when the voters get exactly what they begged for, good and hard, and give it right back to Republicans.
But I’m cynical.
Follow Steve on Twitter @stevengberman.
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