Congrats, Congress, you put on a good show
“As threats crop up, groups tighten. As threats subside, groups loosen. Threats don’t even need to be real. As long as people perceive a threat, the perception can be as powerful as objective reality.” — Michele Gelfand, “Rule Makers, Rule Breakers: How Tight and Loose Cultures Wire Our World”
“There are two kinds of idiots — those who don’t take action because they have received a threat, and those who think they are taking action because they have issued a threat.” — Paulo Coelho, “The Devil and Miss Prym”
It was all a foregone conclusion, wasn’t it?
The ingredients were right there for all to see: a potential catastrophe faced by a Republican-controlled U.S. House, a Democratic-controlled U.S. Senate, and a Democrat in the White House.
None of them prone to allowing catastrophes (especially ones for which voters might blame them), they had to find a solution to the catastrophe.
With power divided, that solution must contain compromise.
I knew, after watching several such fights happen in recent years, that Republican U.S. House Speaker Kevin McCarthy and Democratic President Joe Biden would reach some sort of deal to raise the nation’s debt ceiling. I knew that deal would contains cuts to federal spending, but the cuts wouldn’t go as deep as House Republicans wanted.
And I knew, unfortunately, that Biden and McCarthy would announce the deal just shy of going over the catastrophic cliff.
And so it was.
With just days to spare before the U.S. Treasury ran out of the authority to borrow more money to pay the government’s bills, McCarthy and Biden announced a deal that would cut the federal deficit by $1.5 trillion over 10 years — compared to the $4.8 trillion the Republicans originally wanted — and suspend the debt ceiling until Jan. 2, 2025, among other provisions.
Let’s first say that the debt ceiling is a broken system.
The ceiling has nothing to do with new spending. It’s how much money the Treasury can borrow to pay for bills already authorized by Congress. Defaulting on that debt — by exceeding the ceiling — would have dangerous consequences for the economy, experts say.
It’s like giving your kid your credit card, that kid maxing out the credit card, and then letting your kid decide whether to raise your credit card limit so you can keep paying the bills your kid ran up. Oh, and if that kid decides to throw a tantrum and refuse to raise your limit, you lose your house, your car, and everything but the shirt off your back.
If Congress really wants to control the deficit and debt, they ought to pass a law that says Congress can’t appropriate more than the current debt ceiling or cut taxes to the point that Treasury has to borrow more to make up for the lost revenue.
But neither side will do that, because Congress loves nothing more than spending or cutting taxes without worrying about the consequences they then get to blame on other people.
So, every couple years or so, regardless of which party controls which chamber or which party sits in the White House, they end up back in a fight about raising the debt ceiling.
And they always run that fight out to the 11th hour, scaring the American people and making the markets skittish, even though they know essentially how that fight will end.
In this case, McCarthy and Biden didn’t even begin talking until mid-May, just a couple weeks before the so-called “X date” when Treasury would run out of money. They’ve known about the debt deadline since the last time Congress raised the ceiling in December 2021.
That’s just plain irresponsible.
It’s all just for show. Showing you’re tough on the other side. Showing you don’t cave.
The real work of Congress, which (for the most part, at least) represents the diverse ideological interests of the American people, happens at the negotiating table.
Everything else — all the press conferences and statements and even the Republicans’ April passage of a bill to raise the debt ceiling that they knew had no chance of passing the Democratic-controlled Senate — is just brinkmanship for the sake of brinkmanship. It’s posturing.
And that’s dangerous, causing anxiety in the markets, which can shave wealth from the American people.
Congress now knows it has until Jan. 2, 2025 to fix this problem again.
They ought to start talking soon.
Justin A. Hinkley can be reached at 989-354-3112 or firstname.lastname@example.org. Follow him on Twitter @JustinHinkley.