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The Guardian - US
The Guardian - US
Comment
Steve Phillips

White House timidity on the debt ceiling is infuriating. What is it afraid of?

‘In the face of this impending emergency, myriad proposals have surfaced to call Congress’s bluff and ignore the ransom demand.’
‘In the face of this impending emergency, myriad proposals have surfaced to call Congress’s bluff and ignore the ransom demand.’ Photograph: Susan Walsh/AP

One wonders what the Biden administration is afraid of when it comes to calling the Republicans’s bluff on raising the federal debt ceiling. While White House officials no doubt have genuine legal and policy concerns about their ability to act unilaterally to defuse the crisis, the overriding reason is probably fear of the political consequences, and on that front they are both misreading the moment and misunderstanding the composition of the country’s electorate.

To quickly recap, Congress passes laws to “promote the general welfare” of the public, and those laws usually cost money. Not infrequently, the cost of those laws exceeds the amount of money the government has in the bank, so they have to borrow money to pay the bills. But because of an obscure 1917 law, the amount of loans the government can take out to pay its bills is capped at a set (and, frankly, relatively arbitrary) amount. When this happens, Congress must raise the limit of how much money can be borrowed to meet the country’s obligations.

When a Republican is in the White House, this basic duty happens without any drama or fanfare. The limit gets raised, the bills get paid, and life goes on. But after Barack Obama was elected president, “burn it down” Republicans have taken to using the need to raise the debt limit as an opportunity to hold the government hostage and demand draconian cuts in spending programs – previously congressionally approved spending programs, mind you – in exchange for increasing the authority to borrow more money. Despite near-universal agreement that the economic shock and turmoil of defaulting on the debt would be catastrophic, the Republicans don’t care and use the potential economic crisis to pursue their destructive agenda. That is the behavior of terrorists.

For its part, the administration has said it won’t negotiate with terrorists and is insisting that Congress pass a “clean” debt-limit increase. In a speech last week, President Biden said that Republicans are “literally, not figuratively, holding the economy hostage”.

So we are at a standoff with dire economic consequences, particularly for low-income Americans and people of color still working to overcome the nation’s gargantuan racial wealth gap that accounts for much of the nation’s inequality in education, housing and employment.

In the face of this impending emergency, myriad proposals have surfaced to call Congress’s bluff and ignore the ransom demand. Respected Harvard professor Lawrence Tribe has advocated for simply challenging the constitutionality of the 1917 law as a violation of “section 4 of the 14th amendment [which] says the ‘validity’ of the public debt ‘shall not be questioned’ – ever.”

Another hostage-ending approach championed by Willamette University law professor Rohan Grey and New York Times economics columnist Paul Krugman would be to have the treasury secretary simply mint a trillion-dollar coin and put it up as a guarantee that the US will pay its debts. Krugman writes that minting the coin and bypassing Congress “would be economically harmless – and would both avoid catastrophic economic developments and help head off government by blackmail”.

The good news is that these solutions, once entertained as too radical or risky, are at least in the conversation. As recently as last week, President Biden said after meeting with the Republican House speaker, Kevin McCarthy, that he was still “considering the 14th amendment”. The bad news is that the president’s advisers are tiptoeing around these options for fear of them being “risky” in terms of the reaction on Wall Street and in the financial markets. Well, defaulting on debts is what’s really risky, and the economy and markets have always shown remarkable resilience, bouncing back from previously unthinkable shocks (the S&P 500 stock index doubled in value after absorbing the pandemic shock of entire world economy essentially shutting down).

Most fundamentally, the timidity of the White House leaders stems from a misreading of the political moment we are in and the nature of the opposition they face. The leaders of the Republican party do not care about the economy, our democracy, or the United States of America (emphasis on united; they care about a scattered number of states, most of them the former slave-holding states of the Confederacy).

This is not a public policy dispute among well-meaning civic leaders with different political philosophies. The Republicans do not subscribe to the same social contract or constitution that governs binds the nation. This was made most clear on 6 January 2021 when the majority of the Republicans in Congress voted to overthrow the elected government of the United States. They are engaged in a ferocious battle to beat back the growing power of a multiracial electorate and any public policies designed to meet the needs of that multiracial nation. Believing that there is any reasoning with these folks is folly.

Furthermore, a close reading of public opinion polls shows that the electorate is on the side of the president, and, most importantly, the overwhelming majority of the groups in the population that put Biden in the White House in 2020 (and held the Senate in 2022). The April CBS News/YouGov poll found that, when informed of the consequences of default, 70% of all voters support raising the debt limit. Among African Americans, 85% of those polled support an increase; 72% of Latinos support the raise. Even among white voters – whose support for Democrats is historically capped around 40% – a sizable majority, 67% support a debt limit increase.

Which brings us back to the question. What are they afraid of?

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