Dem 51
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GOP 49
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Game of Debt-Ceiling Chicken Continues

The United States is a little more than 3-1/2 weeks from defaulting on its national debt, which is perilously close to big-time trouble, and yet still leaves plenty of time for posturing, it would seem. Certainly, posturing is all we got this weekend.

To start, Senate Republicans may sometimes look askance at their rabble-rousing fellow partisans in the House, but in the end, they're all still Republicans. And so, if you were hoping that sober-minded GOP members in the upper chamber would join with the Democrats to resolve this crisis, well, sorry to disappoint you. Sen. Mike Lee (R-UT), who is as Freedom Caucus-y (is that a word?) as pretty much any House member, has rallied 42 of his Senate colleagues to the "no debt ceiling increase without spending cuts" banner, getting them to sign on to a letter to that effect.

This means that, right now, there are at most 57 votes for ramming through a clean debt-ceiling increase. Of course, 57 is less than 60, and so not enough to overcome a filibuster. Further, the Republicans who did not sign include Josh Hawley (MO), Rand Paul (KY) and John Kennedy (LA). One has to guess that trio was not in the office that day, or something like that, because they are not the type to join with the Democrats under these circumstances. Meanwhile, the "Democrat" Joe Manchin (WV) and the "independent" Kyrsten Sinema (AZ) are doing some posturing of their own these days, so their votes for a clean debt-ceiling increase are probably not be available, either. Oh, and Sen. Dianne Feinstein (D-CA) is still recovering from her bout of shingles and isn't in Washington. Add it up, and it's probable that Majority Leader Chuck Schumer (D-NY) has 50-51 votes for a debt-ceiling increase. If those same 50-51 would be willing to support a filibuster carve-out for debt ceiling bills, then that would be enough, but it is unlikely that the three other Republicans who did not sign Lee's letter (Susan Collins, ME; Lisa Murkowski, AK and Mitt Romney, UT) are willing to go that far.

Meanwhile, Secretary of the Treasury Janet Yellen was on ABC's This Week with George Stephanopoulos, and all Stephanopoulos wanted to talk about was the debt ceiling. In particular, the host wanted to know if the Biden administration was considering invoking the Fourteenth Amendment in order to break the logjam. Yellen's initial answer:

There is no way to protect our financial system in our economy, other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills and we should not get to the point where we need to consider whether the President can go on issuing debt. This would be a constitutional crisis.

You will notice that the word "no" does not appear at any point in that answer. Stephanopoulos certainly noticed it, and kept following up with Yellen, only to get equally evasive answers like: "Look, I don't I don't want to consider emergency options. What's important is that members of Congress recognize what their responsibility is..." One has to presume that this is a message to Speaker Kevin McCarthy (R-CA) & Co.: "We're not going to threaten you publicly, but you better believe we'll use the Fourteenth Amendment if we have to."

And as long as we are on this subject, let's answer a few questions that otherwise would have been in Saturday's Q&A:

M.M. on Bainbridge Island, WA, asks: Regarding the debt ceiling, I have heard people—including Marjorie Boebert Gaetz—say that it's worth a government shutdown to get spending cuts. My understanding is that a default would be much worse than a "normal" shutdown. Can you enlighten us on the difference?

(V) & (Z) answer: In a normal shutdown, the U.S. government ceases incurring new financial liabilities. So, for example, federal employees are told not to show up for work because, until the budget is in place, they won't be paid for their work. In a default, the government fails to make good on liabilities it has already incurred. That's a big problem, because the American financial system, and indeed the world financial system, are built very much upon the notion that anyone who loans money to the U.S. government can get it back instantly when the debt comes due. Not only are U.S. bonds issued based on this promise, so too is U.S. currency, which is backed by "the full faith and credit of the United States of America."

B.C. in Walpole, ME, asks: In the game of Debt Ceiling Chicken, where are the Republican donors? I would think that if I were a wealthy businessperson involved with a large company or companies, the last thing I would want would be to see a default or even near-default by the federal government. Bad for business. Wouldn't be prudent. And I would therefore call important GOP leaders and also members of the House of Representatives and tell them, "If this happens, you'll get blamed. Even if the rest of the nation doesn't blame you, I and other important donors will blame you. You must prevent a default at all costs." Obviously, I'm not a wealthy GOP donor. On my family's budget, I can't even afford to buy Nazi memorabilia, much less purchase my own Supreme Court justice.

(V) & (Z) answer: You can assume that the business class is doing plenty of lobbying behind the scenes. And maybe that arm-twisting will eventually cause Republicans to cave. On the other hand, Republican politicians these days are much less inclined to listen to the big business types, since they (and, in particular, the MAGA crew) get much of (and sometimes most of) their money from small donors through WinRed.

H.N. in Cleveland, OH, asks: Secretary of the Treasury Janet Yellen may not have access to ChatGPT and the Treasury may not have enough to pay license fees to Microsoft or other competitors in the field, but do they not have enough computing power to calculate, if not to the cents, at least to the dollar, how much in bills the government has to pay?

Can you please check with your home computer guru inside and let us know?

(V) & (Z) answer: To start, the government has a good ballpark grasp of outlays, but it can never know to the dollar, or anything close to that level of precision. There are plenty of things that depend on events beyond the government's control, and beyond its ability to project. For example, what if the mortality rate for Social Security recipients is 0.2% below the norm this month? What if an unusually large number of people apply for small business loans? The income tax deadline for this year for California (and a few other states) was extended to October due to natural disasters. What if everyone who is entitled to a refund, and who has until October to file, instead files in May?

Even more important, however, is that the government just can't be certain about how much money it will bring in. It doesn't know quite how many shipments will pass through the nation's ports, and so how much tariff revenue will be collected. It doesn't know how much money various business concerns will bring in, and thus how much in taxes will be due. It doesn't know exactly how many people will be employed, and thus how much in Social Security taxes and Medicare taxes will be collected.

S.P. in Harrisburg PA, asks: The government has a budget, presumably based on assumed revenue and spending. With that, wouldn't the debt limit have been adjusted to cover the budget? If so, how did we reach the debt limit midway through the fiscal year? So is the debt limit essentially a cash flow issue? Is revenue less than expected? Is more money spent than is budgeted? Just curious how we arrived is this issue if the treasury stays within budget.

(V) & (Z) answer: The debt limit was created over 100 years ago to give the government flexibility in order to deal with World War I. The basic idea was: "Spend what is needed up to this amount, so you don't have to keep coming to Congress in the middle of a crisis."

In other words, the debt limit has always been uncoupled from the actual budget. Over time, the government has gotten in the habit of spending well beyond its income, and the debt ceiling has been reached at the rate of roughly once per year since it was first instituted. So, it's gone from being something of a blank check to being an obstacle to spending.

The debt ceiling could be coupled to the budget. Or, it could be eliminated entirely, which would de facto be the same thing. But there are people (nearly all of them Republicans these days) who want the debt ceiling to be there, either because they believe it reins in spending, or because they want to use it for leverage, as is happening right now.

We shall see what this week brings. Not much, probably, since neither side seems to be feeling much pressure as yet. (Z)

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