by Michael Hiltzik
You might have thought that, what with the pandemic, global warming-driven catastrophes spreading coast-to-coast, and other urgent matters on their plates, congressional Republicans would set aside the urge for infantile posturing.
You would be wrong.
GOP lawmakers are once again saying they’ll vote against raising the federal debt ceiling, which was suspended for two years the last time it came before them, in 2019.
All of a sudden, they’re wringing their hands about federal deficit spending on the pretense that they’ve never done anything like that and it should only be blamed on Democrats.
So here’s the state of play. Sen. Ron Johnson, R-Wis., persuaded 45 of his GOP colleagues to sign a pledge refusing to cooperate with Democrats on raising the debt ceiling.
Johnson and Senate Minority Leader Mitch McConnell, R-Ky., both paid obeisance to the notion that “we should not default on our debt under any circumstances,” as Johnson’s pledge states.
Confidence that Democrats will indeed raise the debt ceiling shouldn’t obscure the absurdity of this recurrent battle over federal spending.
In 2011, I observed that the debt ceiling had been raised by congressional votes 91 times since 1960, generally without discussion. That included seven times under George W. Bush and three times (by then) under Barack Obama.
That year, the GOP took majority control of the House of Representatives, and the debt ceiling morphed into the raw material of a political stunt.
Before getting more deeply into the consequences of debt-ceiling posturing, let’s examine a few fundamental facts about this artifact — a rule that requires Congress to vote its approval for federal borrowing above a set limit.
First, the debt ceiling was not originally meant as a limit on the Treasury’s authority to issue federal debt, but rather as a way to give it more latitude to borrow.
In other words, the limit was never designed to keep Congress from enacting any spending bills or deficit-building tax breaks it wished.
Raising the debt ceiling does nothing to increase spending; it merely authorizes borrowing for debts already incurred by Congress. In the current case, the need for a vote merely gives Republicans a last-ditch opportunity to carry on about Democratic spending proposals.
Point two: The consequences of failing to lift the debt ceiling once it’s reached would be dire for everyone in the U.S. because it would mean defaulting on the national debt.
Then-Treasury Secretary Timothy Geithner warned in 2011 that ruining the U.S. government’s unblemished history of always paying its debts would instantly raise its borrowing costs, placing a heavier burden on its budget and slashing the value of government securities held by individuals and pension funds, not to mention investors in other countries.
Government issuance of Social Security checks, Medicare reimbursements to doctors and hospitals, paychecks to military families and vendors would be halted or cut.
The “full faith and credit” of the U.S., the preservation of which has helped make the dollar the world’s premier reserve currency, would be impaired, possibly forever. This could cause “irreparable harm to the American economy,” then-Treasury Secretary Jacob J. Lew warned then-Speaker John A. Boehner in 2013.
When the debt ceiling kicked in for only three months in 2003, the government was able to stave off default only through the early redemption of bonds owned by a civil service retirement fund. That cost the fund and its beneficiaries more than $1 billion in lost interest, the Government Accountability Office determined.
The 2011 fight over the debt ceiling resulted in the sequester, an automated austerity regime aimed at suppressing nondefense spending.
The sequester was a gun Congress held to its own head, designed to be so lethal that our lawmakers wouldn’t dare to pull the trigger in the form of required across-the-board budget cuts that were so draconian that Congress would have no option other than find a more measured response. No one told the trigger finger. So the budget cuts went into effect.
The sequester pared gross domestic product by 1.2%. The Congressional Budget Office calculated it would cost as many as 1.6 million jobs over its first two years.
Tens of thousands of 3- and 4-year-olds were barred from Head Start, perpetuating the vicious cycle of poverty. Unemployment benefits were cut by an average of 15% nationwide. Congressional pay and benefits, naturally, were exempt from those cutbacks.
So here we are again. The debt ceiling was suspended for two years by a 2019 budget deal, but came back into effect Aug. 1 at $28.5 trillion. Without a raise in the ceiling, the Treasury won’t be able to issue new indebtedness. The crunch won’t be immediate, but it looms on the horizon.
As is almost always the case, the Republican stance on the debt ceiling depends on mass amnesia. Nor do they ever mention one of the biggest budget-busters of recent times, the 2017 tax cuts, which passed without Democratic votes and will add more than $1.5 trillion to the deficit over 10 years. Every one of the senators who signed Johnson’s pledge and were in the Senate in 2017 voted for the tax cuts.
Those tax cuts overwhelmingly favored corporations and the wealthy, which points to a strategy that Democrats should consider if the GOP stands firm on insisting they manage the debt ceiling issue all by themselves: Roll the 2017 tax cuts all the way back. That should provide enough money to shut the GOP deficit hawks up, at least for a while.
Michael Hiltzik is a columnist for the Los Angeles Times.