How Biden failed the debt ceiling

As soon as Republicans took control of the House of Representatives last November, it was obvious they were going to try to take control hostage economy refusing to raise the federal debt limit.

After all, that’s what they did in 2011, and believe it or not, Republicans in the tea party they were sober and sane compared to the gang GUIDED PROCEDURE.

https://www.clarin.com/new-york-times-international-weekly/locura-monetaria-internacional-ataca-nuevo_0_jM9iiAV4Sr.html So it was also obvious that the Biden administration needed a strategy to deal with the crisis that was coming

However, it seems more and more that there has never been a strategy beyond wishful thinking.

I hope I’m wrong:

that the president Joe Biden unveil an effective last-minute blackmail response from the Republican Party.

You may even be forced to, as I’ll explain later.

But right now, I have a bad feeling about all of this.

What were they thinking?

How could they take so long? taken aback something that everyone paying attention saw coming?

For those of you who don’t know any of this, America has a weird and dysfunctional system where Congress passes laws that determine federal spending and revenue, but then if that legislation leads to a budget deficit, it has to vote a second time. authorize loans to cover the deficit.

If only one House of Congress refuses to raise the debt limit, the US government will take effect defaultwith possible financial and economic effects catastrophic.

This bizarre aspect of the budget allows a party ruthless enough, indifferent enough to the chaos it might wreak, to attempt to wring out policies it could never implement through the normal legislative process.

So what were Biden and company supposed to do once Republicans took control of the House?

They could have tried to raise the debt ceiling during the lame session.

That would have been difficult, with an evenly divided Senate.

Had it been possible, it likely would have required making major concessions to Democratic senators less supportive of Biden’s agenda.

Still, better to negotiate with Joe Manchin than with Marjorie Taylor Greene.

Is there a plan?

So unless there was a plan to deal with the impending confrontation, a great deal of effort would have to be made to do so raise the debt ceiling.

The fact that there hadn’t been such an effort suggested that perhaps there was.

But everything we’ve seen from Biden officials since the House changed hands has been a combination of claims that a US default would be catastrophic – which may well be true – and disparagement of all possible escape routes. around the debt ceiling.

My heart sank, for example, when Janet Yellen, The Treasury secretary has repeatedly dismissed the idea of ​​minting a platinum coin – one of many possible ways to get around the debt limit – as a “trick”.

Yes, it would be a trick, but it would also be harmless.

As I explained the other day, that would not mean printing money to cover the deficit; In practice, this would be equivalent to making a normal debt From the back door.

The problem is that Yellen was, in effect, saying that the administration was not open to any strategy that sounded silly or unorthodox; however, any strategy that avoids debt capping must actually be unorthodox and will likely sound silly when taken out of context.

Aside from the economic merits of various unconventional funding strategies, let’s think about how the White House was positioning itself politically.

On the one hand, she stressed that she is terrified of the consequences of a default; on the other hand, he clarified that he is not even willing to consider any alternative to increasing the debt limit.

The administration could have also put a sign on my back that read “Kick me.”

Perhaps the administration was hoping that moderate Republicans or business groups or supposedly nonpartisan advocacy groups would somehow step in and pressure the GOP into producing a clean debt cap bill.

But I don’t understand how someone who has been awake for the past 15 years could believe it was a real possibility.

And indeed, after months of saying it would never enter into debt ceiling negotiations, that it would agree to nothing but a sharp increase, the administration is now…debt ceiling negotiations.

Many people have pointed out that this sets a terrible precedent:

that having seen extortion work, Republicans will turn again and again.

However, even these concerns seem too long-term to me.

Now that Republicans see what appears to be an administration on the run, there’s every reason to hope they’ll continue to escalate their immediate demands, most likely to the point where that’s no longer possible. NO agreement.

There is a precedent from the years of Obama.

In 2011, the president Barack Obama and John Boehner then Speaker of the House of Representatives, they were about to reach a call Great debt deal that would have been objectively terrible – for example, it would have increased the access age to Medicaredespite the fact that the life expectancy of working-class Americans had increased very little – and likely would have been politically disastrous for the Democrats.

But the deal fell through because Republicans were unwilling to accept even small tax increases as part of a deficit reduction plan.

Naturally, Republicans rejected all proposals to make a debt ceiling deal more palatable to the Democratic base by closing tax loopholes.

I have no idea what will happen next.

I think there is a real possibility that Biden officials will eventually be forced by Republican intransigence to adopt unconventional methods, a task made all the more difficult by the fact that those same officials have spent months badmouthing the approaches they may have to take.

But I see no other way to see the whole episode than as a disastrous failure to face the reality of an opposition party controlled by extremists.

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