Mitch McConnell Threatens To Take The Nation Hostage Again Over The Debt Ceiling

The government will likely run out of borrowing authority sometime in October or November unless Congress takes action to raise or suspend the debt limit (debt ceiling), the Congressional Budget Office warned Wednesday. Debt limit deadline likely October or November, CBO says:

The new forecast sets the stage for a fall showdown over the debt limit that already promised to become a partisan firefight. Top Republicans, led by Senate Minority Leader Mitch McConnell of Kentucky, vowed not to cooperate on debt limit legislation, saying Democrats would have to act on their own to avoid a default on U.S. obligations later this year.

Let’s unpack this. First of all, the debt limit is not for authorizing new government borrowing. It is for money already borrowed and appropriated by Congress, i.e., for existing debt.

Second, the U.S. Constitution, Section Four of the Fourteenth Amendment, directs in no uncertain terms that “the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” In other words, the U.S. government must honor the full faith and credit (the unconditional guarantee or commitment to back the interest and principal) in payment of its debts, and is not permitted to default on the debt.

Third, the “Grim Reaper of Democracy,” Mitch McConnell, is saying that Republicans will not honor their constitutionally prescribed duty. Once again, Republicans have abandoned governance. It will be up to the responsible adults, the Democratic Party, to fulfill the constitutionally prescribed duty of honoring the full faith and credit of the United States.

This evil GQP bastard has done this before. In 2011, the United States reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Mitch McConnell owned this downgrade in our credit rating. It was all his doing.

The “Grim Reaper of Democracy” did this for the bullshit “fiscal cliff” mechanism to set up the next regular hostage taking by Mitch McConnell. It is time that people start referring to this evil man for what he truly is, a domestic terrorist.

This GQP hostage taking only occurs when there is a Democrat in the White House. When Republicans controlled Congress under President Donald Trump, the debt limit was suspended as a matter of due course, as it should be, without provoking a crisis. Congress suspended the debt limit two years ago, but that measure will expire on July 31.

There would be no immediate default on that day because Treasury is expected to have an unusually large $450 billion cash stockpile at that point and it can use so-called extraordinary measures — accounting tools to create more borrowing room — to extend its borrowing capacity.

But that headroom will become exhausted sometime in the first quarter of the coming fiscal year, which begins Oct. 1, the CBO said Wednesday. The drop-dead date would occur “most likely in October or November,” it said.

“After that point, the debt limit would cause delays of payments for government activities, a default on the government’s debt obligations, or both,” the agency said in its report.

[In] a floor speech Wednesday, Senate Majority Leader Chuck Schumer, D-N.Y., said Republicans “should not be playing political games with the full faith and credit of the United States.” He pointed out that both parties supported suspending the debt ceiling on three occasions under former President Donald Trump.

Democrats, as the majority party, must decide whether to go it alone — and face partisan attacks — or endure some contentious negotiations with Republicans seeking leverage [ransom demands] over spending decisions.

Raising or suspending the debt limit on their own would require Democrats to include the measure in a reconciliation package, which skirts the risk of a GOP filibuster. But any such party-line vote on the debt limit would give Republicans a political cudgel to attack Democrats as the party of excessive spending and higher debt.

WTF kind of talking point is this? The debt limit has to be raised because of the Republicans-only 2017 tax cuts for the wealthy and corporations, and the two COVID-19 economic relief bills passed by a Mitch McConnell controlled Senate under President Trump in 2020, and one COVID-19 economic relief bill passed by Democrats in early 2021. It has absolutely nothing to do with the current spending proposals in budget negotiations for fiscal year 2022. This is about past spending over the past four years.

Republicans always “attack Democrats as the party of excessive spending and higher debt,” even though most of the national debt incurred since 2001 has been due to Republican tax cuts that did not pay for themselves, two wars put on the nation’s credit card, and the economic ruin caused by Republican policies that resulted in the 2008 Great Recession, and their subsequent sabotage of President Obama’s economic recovery plans, and the 2020 COVID recession. Americans never seem to hold Republicans accountable for the economic harm that they have caused Americans. This is why Republicans do not fear doing it again – there has been no consequences.

This graph is U.S budget surpluses or deficits for the past twenty years. President Bill Clinton was producing budget surpluses until George W. Bush tanked the economy. President Obama began recovering the economy, even as Republicans sabotaged his economic recovery plans. Republicans under Donald Trump ran increasing deficits until the economy went off the cliff with the 2020 COVID recession. Projections are that President Biden’s economic plans will begin to reduce the current deficit, but still run higher than the Obama administration.

This graph is for U.S. public debt, which has exploded since George W. Bush’s 2001 tax cuts and Donald Trump’s 2017 tax cuts. When the government does not take in sufficient tax revenue, it must borrow to meet its spending requirements. And this is even before any serious investment in fighting the climate crisis, which will be enormously expensive. This is why we must claw back those Republican tax cuts for the wealthy and corporations.

Republican hostage takers have made clear they intend to exact a political price, i.e., ransom demands, for any bipartisan deal on the debt limit.

For instance, Trump fluffer South Carolina Sen. Lindsey “Stonewall” Graham, the top Republican on the Senate Budget Committee, said he’d want to tie any debt limit action to the creation of a commission dedicated to fixing the projected insolvency of government trust funds like the ones that finance Social Security and Medicare. That’s based on a bill from Sen. Mitt Romney, R-Utah.

“I think it’s time to have some structural reforms in place, because the debt is exploding,” Graham said.

In other words, Republicans are coming for your social security and Medicare again. They have been attacking these social safety net programs ever since they were first created. They are not interested in the solvency of these programs, or they would have done something about it when they had the chance. As always, they are only interested in reducing or eliminating benefits that you paid for with your payroll deductions.

Social security and Medicare are self-funded by payroll taxes and Trust Fund investments, they are not a driver of the federal debt. The only debt relationship is that it is an obligation which the government must honor with the full faith and credit of the U.S., something McConnell just said Republicans will not do, in violation of their constitutionally prescribed duty.

Democrats said they have no intention of cutting any deal on spending to win GOP support. “Nobody is going to hold the American economy hostage,” said Senate Finance Chairman Ron Wyden, D-Ore. “Period. Full stop.”

Nice sentiment, senator, but Republicans have routinely taken the nation hostage and demanded ransom for years.

Raise vs. suspend

Democrats also must decide whether they want to raise the debt limit to a specific dollar amount, or whether they should simply suspend the debt limit altogether, as Congress has done each time since 2013.

Budget experts have said using reconciliation would likely require resetting the debt limit to a specific dollar amount. The 1974 budget law that created the reconciliation process says the procedure can be used to “specify the amounts by which the statutory limit on the public debt is to be changed and direct the committee having jurisdiction to recommend such change.”

But Hoyer said Tuesday his preference is to suspend the debt limit through a certain date instead of increasing the borrowing cap to a certain dollar amount. And it’s easy to see why suspending the debt limit, which doesn’t appear to be allowed under budget reconciliation rules, is the politically preferable route.

If the debt limit is reset to roughly $28.5 trillion, as the CBO projects, that level would amount to a debt increase of $6.5 trillion since Congress last voted to suspend the debt ceiling in 2019.

A bill to raise the debt limit by that amount back then would have likely been laughed out of the room, and lawmakers would have had to come back again during the pandemic to ratchet up the debt ceiling, perhaps multiple times.

From the beginning of March 2020, just before lockdowns began, through Trump’s last day in office in January 2021, debt subject to limit — which includes securities held by government trust funds like Social Security and Medicare — rose by $4.3 trillion. That doesn’t include additional spending on pandemic relief and other matters that was set in motion by earlier votes but hadn’t yet flowed out of the Treasury.

Recognizing that the need to raise the borrowing cap stems from past fiscal decision-making, at least one Republican said Wednesday he was open to supporting a debt limit increase.

“My personal opinion is that once you have acquired the debt, you are responsible for the debt and you need to address the debt,” said Sen. Mike Rounds of South Dakota.

Wel, no duh, senator. Glad to see that you understand what full faith and credit means. Maybe you should the time to explain it to your fellow Sedition Caucus members.