The Debt Ceiling Marks Republicans’ Turn To Not Let Crisis Go To Waste
Where does all that talk about teachable moments and national conversations go when government refuses to acknowledge that maybe, just maybe, a $28.4 trillion debt in a non-wartime $23 trillion economy is plenty.
Now that it’s the federal government’s turn for “lockdown,” the GOP mustn’t let the crisis go to waste, as the saying goes.
Many conservatives call for not raising the debt limit without reforms. But more than just stopping Joe Biden’s $3.5 trillion families, “build back better” and reconciliation amalgam as plenty of them would like to do, the GOP should be discussing stopping the debt limit increase altogether and substituting spending cuts. Biden today hosted an alarmist panel demanding bipartisanship on averting debt limit default with JPMorgan Chase CEO Jamie Dimon and Treasury Secretary Janet Yellen. While billed as a meeting with business leaders “on the Need to Immediately Address the Debt Limit and the Damaging Consequences for American Families, Small Businesses, and the Economy If Unnecessary Delay Continues Any Further,” each and every one left the spending-restraint half of the bipartisanship equation out.
In Biden’s October 4 speech on raising the debt ceiling he proclaimed “Raising the debt limit is about paying off our old debts. It has nothing to do with any new spending being considered. It has nothing to do with my plan for infrastructure or building back better. Zero. Zero.”
The intent in all this is to blame Republicans for a “default,” and many news stories lend support by dutifully proclaiming that the debt limit increase is to cover “prior commitments,” bills we “already owe” or some similar phrase, such as repeating how the Treasury Department “has warned money would run out to pay past bills.” Each carefully notes that Republicans took part in the racking up of debt.
Meanwhile, accusing Democrats of a “reckless tax and spending spree,” Senate Minority Leader Mitch McConnell sent a letter on October 4 reminding Biden that Democrats can raise the debt limit themselves with a simple rather than supermajority vote by embedding it in the very same reconciliation process they’re employing for the broader Biden being advanced with no bipartisan support. Biden, naturally, wants Republican fingerprints on a debt limit increase, anticipating that future Republicans will protect elements of the progressive agenda — as they have done in the past — as the passage of time renders them as fixed as the stars — and Medicare and Social Security.
Biden accused Republicans of putting the “full faith and credit of the United States” at risk. Both sides accuse the other of playing Russian Roulette with the economy.
But let’s get real. As the meme goes, if taxes are still being withheld from your paycheck, the government isn’t shut down; and it means the Treasury still has a monthly “income” of taxes and fees that it can prioritize, just like the rest of us have to do in our daily lives, and thereby can still cover interest payments to service debt and prevent bond default. The only way that wouldn’t happen is if sabotage or a resurgence of “#resistance” occurs, which cannot be ruled out given a regime floating the radical notion of a trillion-dollar platinum coin to get around the necessity of Democrats approving the increase without Republican support, or working to slash outlays. Sen. Patrick Toomey (R-Pennsylvania) said in September that, given the adequacy of tax revenue, “There’s absolutely 0.0% chance that anybody wouldn’t get coupon and principal payments on U.S. debt securities on time.” and that there “would be a prioritization — the Treasury doesn’t like to talk about it, but that’s only because they are afraid that increases the chances the debt limit doesn’t get raised.” Toomey has long pointed out the same reality in prior debt limit debates.
John Tamny, author of Popular Economics and Who Needs the Fed, has for years made similar arguments, as well as noting that as far as genuine default goes, the federal government pays its obligations with devalued dollars all the time, so the handwringers don’t actually care about default; its just a matter of which group of people has things done to it.
For non-securities obligations, we can of course change “what we already owe” and prioritize. Many Americans routinely realize things aren’t affordable or needed anymore, and scale back. Alongside the Treasury talk and action on “extraordinary measures” to prevent default, the approaching deadline presents the opportunity for the GOP to present priorities, and for it to be the one insisting on bipartisanship instead of Biden and Yellen. While lifetime paid-into entitlements will undoubtedly be prioritized, perhaps federal contractors who, like the government employees that missed their haircut during Covid, may not be. Things largely continued as normal for Americans during 2019’s 30 percent government shutdown, calling into question some of the other unexamined 75 percent as well. A media unmoved by normal people being thrown out of work by Covid lockdown were upset that an IRS employee inconvenienced by the 2019 shutdown had to eat meatless chili.
There’s unspent Covid funding that could be repurposed and used for interest on debt. There were unfulfilled exercises in executive branch streamlining undertaken during the Trump administration to consolidate, de-dupe and streamline at regulatory agencies that could have their day in the sun right about now. The post-Afghanistan Pentagon budget presents boundless savings potential, and also a lesson about refusal to say the emperor has no clothes with respect to the folly of “forever war.” Biden’s agenda — amounting to the declaration of domestic forever wars encompassing what the left calls “investments” in child care and universal pre-kindergarten, health care, college, housing and much more — is likewise “nude” in the sense of being highly debt-inducing in its fusion of normal household obligations with government, and its costly planks like climate interventions. Where normal infrastructure serves human beings; Biden’s “human infrastructure” serves government overseers. Biden is still not even done with endless war overseas, given his United Nations appearance calling for “using the power of our development aid to invest in new ways of lifting people up around the world; of renewing and defending democracy,” as well as of addressing the “borderless climate crisis.” But unlike the hindsight of Afghanistan, Biden’s “build back better” can be abandoned before it begins, leaving no weapons or swath of destruction behind.
The point is, things can be prioritized, cut, and left undone, a fact reiterated by the “Full Faith and Credit Act” just introduced in the Senate. The GOP has arguably wasted even more time on proposing downsizing than Democrats have on engineering a unilateral debt limit increase. Rolling back spending to that of a few years ago could even result in a balanced budget were leadership so inclined — or forced to by the need to confront a debt limit.
The debt ceiling is fine right where it is, just as it was in prior iterations of the brinksmanship; end the programs and cut the spending. Default drama notwithstanding, there is far greater risk to the continued existence of the United States as a limited constitutional republic if trillions in transformational and hyper-regulatory social spending continues unabated. Biden told Republicans this week to “Just get out of the way. You don’t want to help save the country, get out of the way, so you don’t destroy it.” Instead, it’s mounting debt that threatens to destroy the county and prevent future generations from dealing with their own crises.
In an administrative state governed by a field of constitutional law engrossed in unearthing loopholes to get around constitutional constraints on government spending and regulation, the debt limit hammer is arguably the only institution left capable of forcing government to shrink, which is why some want it eliminated altogether. Treasury Secretary Yellen calls for removing the debt ceiling entirely, remarks made while simultaneously advocating taxing unrealized capital gains of American families. This is one of the most astonishing developments of 2022, and the GOP needs to see the big picture as the door gets opened to wealth tax.
As John Tamny has noted in past iterations of this saga, if the failure to raise the debt limit calls into question Congress’s ability to pay bills, that means in the longer term it will assume fewer of them; and that means more resources remain where they belong in the private sector. None of the luminaries ventured to make that happy case in Biden’s White House meeting today. It does seem the height of arrogance to raise the debt limit and enable a spending spree by effectively removing removing credit availability for the private sector at this critical post-shock point in American history. In the long run it is only cutting spending and government’s hogging of the economic bench, not perpetual debt limit hikes, that will prevent the default chaos hyperventilated about now by those whose worldview seems to be, “When you run out of other people’s money, keep spending anyway.” Already there’s not enough money to fund Social Security commitments, and rising interest rates will mean tens or even hundreds of billions extra in debt service costs aggravated by Biden’s new spending that could have stayed in Americans’ pockets. So it is neither sufficient nor desirable that McConnell tell Democrats to “go it alone.” There needs to be pushback on the debt limit increase from GOP leadership, with an agenda for downsizing. Otherwise significant new regulatory agencies and their interventionist agendas will become as permanent as those of the past, and future debates over debt limit will already have “build back better” embedded in concrete foundation.
It must be noted that the lack of collective GOP passion to cut government is striking in contrast to the zeal of the left. While Democrats reflexively rally to stop Republicans from spending a relatively trifling few billion on a border wall (not an endorsement), Republicans do not move to prevent trillions in spending from harming the country by freezing the debt limit. Not only that, they give Democrats who don’t need it step-by-step instructions on how they can raise the limit themselves, and somehow regard that as satisfactorily “owning the libs.” The mid-1990s was the last time a serious rollback of the federal enterprise was attempted, in an obviously failed effort to eliminate the Departments of Commerce, Education and Energy. Talk of abolishing the Transportation Security Administration evaporated years ago, and even the recent unbalanced “Homegrown Violent Extremism” rhetoric of TSA’s parent Department of Homeland Security didn’t revive scrutiny. And of course, bodies like the Government Accountability Office have long called for overlap reduction and defragmentation of government programs, to little avail.
To be sure, Trump inflated the debt and signed debt-limit increases; and the GOP itself not only caved on the extremes of the Covid reaction such as eviction moratoria, it still gives little indication of any concrete plan to avert an over-spending reaction to the next economic shock and exploitation of it by the same “reset” and “build back better” proponents that steer policy now, despite the pandemic being the third, not the first, economic shock of the 21st Century. It’s better to cut the water off now. Biden doesn’t even need $3 trillion and knows it; he just needs a few seeds that will root among the sort of Republicans that sign on to an infrastructure bill in today’s environment.
Yes, the surface-level controversy is fake; there is no “standoff” when Democrats can raise the debt ceiling without the GOP’s permission, yet intend to blame Republicans regardless. So the GOP needs to be prepared figuratively to walk over to the Treasury Department and write prioritized checks itself, and smash the trillion-dollar platinum coin stamp. The arrogance of Treasury, if it were to take that route, of using “platinum” to stamp a single coin rather than say, making a sugar cookie like the ones in Netflix’s Squid Game, is notable. It ranks right up there with Biden and his deputies continuing to infer that the cost of his $5 trillion in “build back better,” human engineering, infrastructure and all the rest is zero. Perhaps the GOP can say the very same about the endlessly harped upon “prior commitments” and the relation those bear to the debt limit.
As Tamny has repeatedly said, the debt ceiling is no crisis, but an “opportunity in disguise.” But if one wants to call it a crisis, let’s not waste it, and make government shrink. Chop up the credit card, $28 trillion is plenty debt.
The real debate underway is that over the appropriate dimensions of the State. The government bumping against a $28 trillion debt ceiling owes those already already gargantuan red-ink proportions to 19th and 20th Century progressivism plus New Deal success at reorienting the relationship of the individual to the government, and to replacement of Congress with unelected rulemaking bodies. Build back better would further suppress the individual and home front in favor of government. The real default at hand is the ongoing collapse of the remnants of limited government.
Instead of perpetually pushing to expand government’s credit line, or worse, removing a limit altogether, Congress can stop racking up bills in the first place. The federal government is now Too Fail to Big.