House Republicans Are Preparing for Hitting the Debt Limit

There have been various stories about a secret three-page side deal Speaker Kevin McCarthy (R-CA) made with the MAGA 20 to get the speakership. Nothing in D.C. remains secret very long. The Washington Post got a hold of (part of) it Saturday and published an article about what McCarthy agreed to do about the federal debt.

Recall, once again, that the debt-limit fight is NOT about future spending. It is about refusing to pay for spending Congress approved in the past. Greatly simplified, it is about the Pentagon asking for a new and expensive weapons system and Congress approving it and appropriating the money. Then, after the contract was signed, and the weapons were built, delivered, tested and accepted, the Republicans said: "We have decided not to pay the manufacturer's bill as stated in the contract." Small-time con artists like Donald Trump stiff their vendors. The U.S. government is not supposed to do this. Most people can understand the concept that after Congress has approved buying something and it is delivered, deciding not to pay the bill is not acceptable or legal. And it is completely different from a discussion about what Congress should buy next year.

The debt limit ($31.4 trillion) will be reached on Thursday, but Secretary of the Treasury thinks she can pull enough rabbits out of her hat to keep the debt under the limit until around June. At that point the government's monthly income from taxes will not cover the monthly expenditures for items Congress approved long ago. The Republicans' secret plan is to prioritize which bills get paid and which ones don't. On a microeconomic level, this would be like a family short of cash deciding to buy food but not pay the rent. Or deciding to pay the electricity bill but not the water bill. The details of the prioritization are not finalized yet, but some things are already known. One would be prioritizing paying interest on the federal debt, some of which goes to Chinese banks. Social Security, Medicare, and defense could potentially be spared, but that would mean enormous hits to the rest of the budget.

Cutting spending will be very difficult. Here are federal spending and revenues for 2022. The inner "pie chart" is revenue and the blue ring around it shows spending.

As soon as the prioritization plan is published, the sh*t will hit the fan. The Democrats' ads write themselves; for example: "The Republicans think that paying interest to Chinese banks is more important than providing lunch to hungry American schoolkids." It will be brutal. If air traffic control is deprioritized and all airline flights stop, we predict it will take less than 24 hours for the ensuing uproar to force the Republicans to back down as business leaders explain to them precisely what will happen next. Especially in terms of campaign donations.

What the Republicans would like to do is cut "welfare" and leave everything else intact. The problem is that the math doesn't work. The 2022 budget deficit was $1.375 trillion, or about $115 billion/month. That means if no new debt can be issued (because the limit has been reached), monthly expenditures have to be cut by $115 billion in order to balance the budget. That's per month. Trying to get to that number would require eliminating many popular programs completely. The uproar would be much louder that the noise that would be picked up by placing a microphone between the rails while a New York City express subway train roared over it at full speed. In fact, it would be the loudest noise ever made, except for when Donald Trump dines alone.

We have seen this movie before. In 2011 and 2013, when the Republicans also came with a prioritization plan, then-President Obama said the government makes millions of payments every day and there is no way to change the software to prioritize some payments and not make others. That would require redoing the government's software systems. That would first require writing a detailed specification, getting bids from vendors, analyzing them, picking a winner, and then getting the winner to write and test the software. The whole process would take years and the software would be full of bugs for years after that, especially if it had to beeen written overly fast to meet some deadline.

The problems with a prioritization plan are numerous. First, it would have to pass the House. No Democrat will vote for it so all it would take is five Republicans to vote "No" to kill it. Second, even if it passed the House, Senate Majority Leader Chuck Schumer (D-NY) would probably not even bring it to the floor. Third, if he did, it would be defeated even if every Republican senator voted for it. Fourth, if it magically passed the Senate, Joe Biden would veto it. It will never become law and the optics of even trying will lay bare either: (1) Republicans' true priorities or (2) Republicans inability to do simple arithmetic that any third grader can do. OK, with 13-digit numbers, maybe any fourth grader.

When push comes to shove in the late spring, what will the Democrats do? Biden might address the nation and explain the consequences of defaulting on the debt—a worldwide depression, a stock market crash, millions of jobs lost, etc. Then he will try to find five sane House Republicans to nip the plan in the bud. Where is Diogenes when you need him? If that fails and the Republicans simply will not budge, Biden has two options left. The first one is to order the U.S. Mint to produce some number of trillion-dollar platinum coins. It's sneaky, but it is absolutely legal. If the coins are deposited in the Fed's bank account and stored in Fort Knox but not spent, this stunt won't cause inflation because inflation happens when too much money is chasing too few goods and services. That wouldn't be the case here. This is just a stupid accounting trick.

The second one is for Biden to cite the Fourteenth Amendment and say that the debt-limit law is unconstitutional, so he will just ignore it and order the treasury to keep issuing debt. Section 4 starts out as follows:

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.

What does that actually mean? (Note to John Roberts: If you are reading this, please drop us a line and explain it to us.) If Biden claimed the debt-limit law was unconstitutional, the Supreme Court would have to make the call—eventually. The Court would no doubt prefer not to make the call, so it would almost certainly insist on the case first being heard in a district court, then in an appeals court. It could take years to get to the Supreme Court, by which time it might have been solved some other way. In the unlikely event that it went this route and the Court took the case immediately and issued a ruling immediately, one of two things would happen. If the Court ruled that the law was constitutional, the government would probably abide by it and the world economy would crash. Guess who would get the blame? Hint: Not Biden. If the Court ruled that the Constitution says that debts incurred by Congress must be paid, then the problem would be solved for all time. Note that "pensions" are specifically mentioned in the Amendment. The Supreme Court could easily rule that includes Social Security (which did not exist in 1868 but is a kind of pension).

In short, we can't see how this stunt would be a winner for House Republicans once the voters understand what they are doing and its consequences. (V)

Trump Will Finally Start Campaigning

While Donald Trump has announced a 2024 run, he hasn't actually done anything that candidates do, like campaign. Considering that Trump hates actually governing but loves campaigning, especially in front of large crowds, his lack of campaign activity is very surprising. However, he has now decided to get the party started. He will do a campaign event in Columbia, SC, later this month. However, it is expected to be an intimate event rather than a mass rally. Typically, intimate events are fundraisers, where guests pay large amounts of money to attend, but Trump has not said if this will be a fundraiser.

Reporters have asked Trump when the rallies will resume. Campaign adviser Chris LaCivita replied with: "People want to push, 'Why aren't you doing rallies?' Well, I think it would be kind of crazy to be spending huge amounts of money this far out." There is some truth in that, but Trump loves rallies and raising money probably won't be a problem, so it does seem odd. January weather is not great everywhere, but there are swing states with decent weather right now, such as Arizona, Nevada, and Georgia. Florida, too, but that brings up other issues since Gov. Ron DeSantis (R-FL) is not likely to support Trump's campaign and he could try to mess with Trump there. On the other hand, the early states for the Republicans are Iowa and New Hampshire, and it is hard to imagine Trump holding a rally in freezing weather in the middle of a snowstorm.

But a lack of rallies doesn't mean Trump's campaign staffers are sitting around twiddling their thumbs. They have hired some old Iowa hands to get to work there and put a full-page ad in the Iowa GOP's annual legislative breakfast program. They are also working closely with the state parties in New Hampshire and Nevada. (V)

When Will Mayorkas Be Impeached?

House Republicans are itching to impeach someone. The hottest of the hotheads want to go after Joe Biden, but there is enough institutional memory of what happened after the House Republicans impeached Bill Clinton in 1998 to put that project on the back burner for the moment (though that could change if Filegate gets out of hand). The "moderates" are more willing to start lower on the totem pole and go after a cabinet secretary. But even though they mostly agree on a target, namely DHS Secretary Alejandro Mayorkas, they are divided on tactics. Should there be hearings first or should they stop pretending there is actually some "there" there and just impeach him right now? After all, it is all for show since there is no way there will be 67 votes in the Senate for conviction. The trial might not even last more than a couple of days.

One of the Congressman with ants in his pants is Rep. Pat Fallon (R-TX), who has already introduced articles of impeachment, even though no hearings of any kind have been held yet. His articles say that Mayorkas lied to Congress when he testified that the border is secure, so he is being impeached for lying to Congress. Rep. Andy Biggs (R-AZ) tried to upstage Fallon by staying he will come with his own resolution shortly, and anyway, it was his idea to impeach Mayorkas, not Fallon's. Fallon is not interested in waiting for Biggs. He wants the impeachment to start now and he got 20 Republicans to sign onto his resolution already.

On the other hand, Rep. Tony Gonzales (R-TX), whose district has the longest border with Mexico of all 435 districts, is not in such a big hurry. He said: "Impeachment is a very serious topic, and it's one where the facts need to lead you to the results, not have a predetermined decision." He wants to hold hearings and see how that goes.

Now Kevin McCarthy will start his on-the-job training. The House Republican caucus is badly split on many things and he is the one who has to herd the cats. Nancy Pelosi has a black belt and also a Ph.D. in cat herding. She made it look easy. Now McCarthy gets to show his stuff. Getting to 218 was not a one-shot deal. He is going to have to do this weekly, if not daily.

In all of American history, only one cabinet member was ever impeached. It was President Ulysses Grant's secretary of war, William Belknap, who was accused of taking kickbacks from a contractor he hired to run a trading post in Oklahoma. Belknap resigned before the Senate trial to escape an almost certain conviction. Mayorkas has absolutely no intention of resigning. (V)

Most House Committee Chairs Are Relatively New to Congress

As we have mentioned several times already, one of the conditions Kevin McCarthy had to submit to in order to get the speaker's gavel was hollowing out the power of the speakership and giving it to the committee chairs and the rank-and-file members. In the old days, the committee chairs came up through the ranks and were typically on a committee for 20 years before becoming chair or ranking member. This system made it common for the chairs to be quite well versed in what the committee did and the areas over which it had jurisdiction.

In the 118th House, McCarthy had to give away some chairmanships as prizes in order to get enough votes. As a consequence, a number of the chairs have served only a short time in the House, let alone on their committee. Having inexperienced chairs doesn't matter if all you want to do is grandstand and put on show hearings, but if the goal were, say, legislating, it's not a great start. For example, the last time before 2023 the House switched from Democratic to Republican control, Rep. Jodey Arrington (R-TX) was an administrator at Texas Tech, Rep. Mark Green (R-TN) was a headhunter, and Rep. Jason Smith (R-MO) was in the Missouri legislature. Now they are running three of the most important committees in Congress: Budget, Homeland Security, and Ways and Means, respectively.

Collectively they have fewer than 20 years in Congress and none of them has ever been ranking member of the committee he will now chair. But it is not only these three. Eight of the chairs have fewer than 10 years in the House. In 2011, only three had less experience than that. Their lack of experience will make them easy prey for lobbyists who will offer them bills and amendments that have consequences the new chairs don't understand. They will also have trouble mediating battles among members whose constituents have different interests. For example, a new farm bill is needed this year. The bill will have a big impact on how much farmers earn and how much consumers pay for food. Different committee members may have quite different ideas on whether farmers or consumers are more important and the chairman will have to deal with this. Similar hot-button issues will occur in almost all committees. Having a chairman who doesn't really understand any of this is not going to produce better legislation.

Also, each committee has a large staff to help the members. The chair is responsible for hiring them. Very few will want to inherit the staff of the previous (Democratic) chair. Consequently, the chair is going to handle staffing. A new chair who has only a few years in Congress is not likely to know enough people to do this well, in contrast to someone who has been on the committee for 20 years and has a pretty good idea of who's out there and what they can do.

Not all the chairs are newbies, though. Rep. Kay Granger (R-TX), who will run the Appropriations Committee, which gets to decide how the government will spend $6.3 trillion each year, has been in the House for 26 years. Rep. Cathy McMorris Rodgers (R-WA), a 19-year House veteran, will run the Energy and Commerce Committee. Still, a large number of committees will be run by people who may be in over their heads. (V)

RNC Will Have a Three-Way Race for Chair

Ronna Romney McDaniel is in a tough race for reelection as chair of the RNC. But it could have been worse. She knew that she would face Harmeet Dhillon, a conspiracy theorist who claims that Donald Trump won in 2020. She also knew that pillow salesman Mike Lindell had announced that he wants to be chair, despite having no qualifications whatsoever for the job. But she probably assumed he wasn't serious and in any case, would not make the ballot. She was wrong. He made the ballot. So now it is officially a 3-way race.

The electorate consists of the 168 members of the Republican National Committee, with three from each state and territory. The election will be held by secret ballot at the RNC's winter meeting in Dana Point, just south of Los Angeles, on Jan. 27. With two actual opponents now, there is a chance that the anti-McDaniel vote will split and she will end up being able to come out on top.

Dhillon is leaving nothing to chance. She will run a full-blown whip operation at the meeting. There will be nightly receptions for delegates. High-profile surrogates will fly in to push her candidacy. One of them will be Arizona gubernatorial loser Kari Lake, but others are expected. A person close to Dhillion said there is a very clear path to her winning.

As usual, there will be candidate forums. These are not debates. Instead, each candidate will get a fixed number of minutes to make his or her case to the members. In the past, some candidates have used the time to make a speech. Other have used it to answer questions from the members.

Fortunately, Republicans are foursquare against bigotry of any kind. This is important because McDaniel is a member of the LDS Church, Dhillion is a Asian-American Sikh, and Lindell is a twice-divorced evangelical Christian.

We don't think there is any polling on the race. However, over 100 members signed a letter back in November endorsing McDaniel for another term. On the other hand, several state parties have passed no-confidence motions condemning her. Because the election is by secret ballot, some of the members who endorsed McDaniel in November could vote for one of the other two candidates and later deny it.

If no candidate gets a majority, there could be multiple ballots. If this goes on for 15 ballots over 4 days, the Republicans are going to have a tough time explaining how they are a unified party. On the other hand, if nearly all of the 100 signatories to the letter vote for McDaniel and she wins on the first ballot, that may erase some of the image of a party mostly focused on devouring itself.

One side note here is that Donald Trump has not endorsed anyone in the RNC race. He handpicked McDaniel back in 2017 to run the RNC but now she is being challenged by Dhillon, who is an election denier who has backed various crazy pro-Trump lawsuits. And, of course, Lindell has a man-crush on Trump the likes of which haven't been seen since G. Gordon Liddy and Dick Nixon. (V)

Pennsylvania Republicans Are Conducting an Autopsy

As you probably know, Republicans didn't do so well in Pennsylvania in Nov. 2022. Their candidates for governor and senator were crushed. Now they are conducting an autopsy to try to discover why. The Republicans knew that inflation was roaring, gas prices were sky high, interest rates were rising, and Joe Biden's approval was underwater. They can't figure out what happened. They just know they should have won. Rep. Dan Meuser (R-PA) a millionaire businessman and politician who his helping to finance the $100,000 autopsy, said: "We want the God's honest truth."

The Republican polling firm Public Opinion Strategies has been hired to unravel the mystery. Some of the areas being investigated are the competence of the state and county Republican Parties, the Party's messaging, the role of the college-educated voters in the collar counties around Philadelphia, and the way the candidates tried to sell their anti-abortion positions. Also a likely suspect is the Republican opposition to early voting and mail-in voting. Andy Reilly, an RNC member from Pennsylvania focused on the latter, saying: "Most folks now on the Republican side recognize that if one party is voting for 50 days and the other party is voting for 13 hours, the party voting for 50 days is going to have a higher turnout."

It looks like they might nail it. The only factor that they don't seem to have noticed is that their candidates were hand-picked by Donald Trump and were anathema to a majority of Pennsylvania voters. Maybe for $100,000, Public Opinion Strategies might discover it. If the Party would just email us, we would tell them for free.

Another minor detail is that if the consultants do manage to uncover the truth (perhaps by asking the voters), what will the state party do about it? Supporting mail-in voting is easy, but if that is not the real root cause of the problem, then what? (V)

Democrats Prevent a Potentially Disastrous Situation

At the start of this Congress, Senate Democrats elected Sen. Patty Murray (D-WA) as pro tem. She has been in the Senate for 20 years and the pro tem has no responsibilities in the Senate, so the announcement of her election was just a short footnote and didn't get much coverage.

Maybe it should have gotten a bit more. As we noted in this week's Q&A, it was a snub of Sen. Dianne Feinstein (D-CA). The pro tem is third in the line of succession to the presidency, after the vice president and the speaker of the House. Traditionally it has gone to the member of the Senate majority party who has been in the Senate the longest. That would be Feinstein. The election of Murray instead was a not very subtle announcement that the Senate Democrats do not think Feinstein is capable of performing the duties of the president if the need arose. In fact, quite a few of them think she is no longer capable of performing the duties of senator. There is little doubt that Murray could perform the duties of the president if she had to.

The order of succession after the vice president is not in the Constitution. It is set by federal law and has changed over time. In recent years, both parties have elected pro tems who could not possibly have functioned as president. In 2001, then-senator Strom Thurmond was elected to the job at 99. He barely knew that he was a senator. In fact, he barely knew that he was alive. Having him with his finger on the nuclear trigger would be a very scary thought. The Republicans knew that his better days were behind him. That's why they dumped him as chairman of the Senate Armed Services Committee. If he couldn't even oversee the Armed Services, how could he be commander in chief?

In 2010, the Democrats picked then-senator Robert Byrd, then 92. He was not as far gone as Thurmond, but he was nudged out of the position as chairman of the Appropriations Committee, a sign that Democrats didn't trust him making decisions about money, let alone all the other things a president does.

Age isn't everything. If the Republicans pick up the Senate in 2024, they will likely choose the 92-year-old Sen. Chuck Grassley (R-IA) as pro tem. Grassley still has all his marbles though, at least now.

Until 1886, the pro tem was second in line, after the vice president. Then the law was changed to put the cabinet ahead of the pro tem and speaker. In 1947, the order was changed again, making it the vice president, the speaker, the pro tem, and then the cabinet.

There is a good case to put the cabinet ahead of the leaders of Congress again. Imagine a terrorist attack that takes out Joe Biden and Kamala Harris together. Then Kevin McCarthy would become president. Since he is a Republican, he would not only fire the entire cabinet, but probably over 1,000 other officials as well. It would be hugely disruptive at a time of national crisis. Getting the Democratic Senate to approve his choice for vice president, cabinet, and all the other officials would be a nightmare.

If the cabinet officials came after the vice president, then the same party would be in charge. If Secretary of State Tony Blinken suddenly found himself in the Oval Office, he would not fire anyone and the government would continue. Over time, he might replace a few people he didn't like, but it would not be the gigantic disruption that switching parties at the top would be. (V)

Merrick Garland Is Not Who You Think He Is

AG Merrick Garland will soon be called on to make the most momentous decision any AG in American history has ever had to make: Whether to indict a former president for trying to overturn a presidential election he lost. It will make the indictment of Jefferson Davis for treason look like a ticket for jaywalking. (Davis was imprisoned prior to his trial and released when Andrew Johnson pardoned all the people who took part in the insurrection. Davis was never even tried.) It is likely that special prosecutor Jack Smith will make recommendations after he has researched the case, but in the end, it will be Garland's call. The cheese stands alone.

What kind of a man is Garland? He is not who he seems to be. He is very conscious of his public image and crafts it with care. Politico reporters spoke to about 20 people who have known Garland, some since high school, and put together an in-depth profile of him in advance of the firestorm that will hit when he makes the decision.

Perhaps surprisingly, Garland does not shun the limelight and never has. He is just cautious about how he appears when in it. In high school, he played the lead in J.B., a modernized, Pulitzer Prize-winning play retelling the Book of Job. He also was the lead in every other play he tried out for. People who seek out and revel in very public roles starting as a teenager are typically not bookish introverts.

He went to both Harvard College and Harvard Law School, where he stood out among a sea of overachievers. He wrote for The Crimson. He supported women's rights before that became trendy. Famous constitutional law professor Laurence Tribe recently said of Garland: "I regarded him then as one of the smartest students I ever had, and he was clearly then very thoughtful and had a global sense of the issues that he had encountered."

After law school, Garland clerked on the Second Circuit and later for Supreme Court Justice William Brennan before becoming a special assistant to then-AG Ben Civiletti during the Carter administration. After Carter lost in 1980, Garland worked for a top D.C. law firm for 8 years until he became a prosecutor, working as an assistant U.S. attorney. In 1993 he was appointed deputy assistant AG, where he led the prosecution of Timothy McVeigh for the bombing of the Alfred Murrah Federal Building in Oklahoma City, which destroyed the building and killed 168 people. In 1995, Bill Clinton appointed him to the D.C. Court of Appeals where he remained until 2021. He thus has worked as a prosecutor or a judge for almost his entire adult life.

One person who knows Garland well said: "He's a person of D.C. He knows this stuff and how it works..." He is known to be very exacting and hands-on. While most judges let their clerks do the research and write their opinions, Garland did this all himself. When on a case, he read all the relevant laws and court decisions himself. He also wrote his own opinions, a rarity among appeals judges. Some people have criticized Garland for moving too slowly. However, until he handed the case over to Smith, he was just being his methodical self, turning over every rock and reading everything ever written that might relate to the case. He is the tortoise, not the hare.

The situation he is now in is unprecedented. Yes, Jack Smith will hand him a report, but ultimately it will be his call, not Smith's. As a judge, he tried to understand the law and determine if the defendant had violated it. That was relatively straightforward. Now the law, the facts, the politics, the public relations, and the likely reaction all come together in an unprecedented way. Garland has no guidelines here. Smith can collect all the facts and summarize them for Garland, but the Select Committee has already done that. In the end, it's Garland's call and he knows the entire world as well as history will judge him for it.

On the job, he is the ultimate professional. When the Politico reporters asked his former clerks about "Garland, the man," the best they could come up with were: "I don't know that he had hobbies," "He drinks a lot of coffee," and "I don't even know if he likes movies." Given this background and the microscope he will be under when he makes his toughest decision, you can count on all the t's being crossed and all the i's being dotted. Some people aren't going to like the decision, but the best they are going to be able to come up with is: "Trump is a criminal and should go to prison" or "Trump is not a criminal and should not go to prison." Garland might be impeached as a result of his decision, but his reasoning will be unimpeachable. (V)

Judge Tosses Trump's Bid to End Rape Lawsuit

Writer E. Jean Carroll has accused Donald Trump of raping her in a New York department store dressing room in the 1990s and then defaming her by calling her a liar went she went public about it. Although the statute of limitations long ago expired, a new New York State law gives victims of sexual assault a 1-year-window to bring a lawsuit, even for incidents that took place decades ago. Carroll has availed herself of the new law and sued Trump under it. Trump asked the judge to throw her suit out because Carroll can't prove economic loss due to the rape.

On Friday, the judge on the case ruled that the law didn't not require economic harm for a lawsuit to be valid and tossed out Trump's attempt to end it. Unless Trump appeals and wins, the lawsuit will go forward.

The new lawsuit is one of two Carroll has filed against Trump. The trial in the first lawsuit is scheduled to start on April 10. Having to defend himself in a lawsuit centered on whether he raped Carroll is probably not something Trump's campaign manager was hoping for. In effect, there will be two trials going on in parallel. In the courtroom, Trump will be trying to escape potentially large monetary damages. But in the court of public opinion, if Carroll is convincing as a witness and Trump slips up on the witness stand, some voters, especially women, may decide that Trump is guilty, no matter what the court decides. The best strategy in the courtroom might not be the best campaign strategy. For example, ordering his lawyers to try to crush Carroll may not play well with women who have been sexually assaulted or have friends or relatives who were. But having them go easy on her may lose the case. (V)

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