The Senators Voting For And Against The Debt Ceiling Bill

 

The Debt Ceiling Crisis Is A Pathetic Political Pantomime

 The following post is by Dan Rather and Elliot Kirschner:

What is happening in Washington is bananas.

Of course we could use much more colorful, or dignified, language.

 

Many in the press are framing the dynamic between the White House and House Speaker Kevin McCarthy over the looming possibility of a United States debt default as a “negotiation.” That’s like “negotiating” with your teenager over their desire to take the family car for an inebriated joy ride with friends on a Friday night. 

Unfortunately, in this case the kids already have the keys and are at the demolition derby. They’re making it very clear that they’re more than happy to wreck everything unless you relinquish all your parental instincts.

 

This metaphor is already too stretched. But trying to make sense of what we’re witnessing requires defying most logic and language.

 

This is a hostage situation.

 

This is a reckless cabal that ran up the bill and now refuses to pay it. 

This is a sign of just how broken our politics are.

The world looks on with disbelief. 

Perhaps there would be a grim humor to the rampant absurdity if we weren’t dealing with a ticking time bomb that has the potential to blow up the American and global economies.

 

Apparently it is easy to ignore the chaos when you are immersed in alternative fantasies. Fox News talking points won’t pay the creditors. Unhinged conspiracy theories will provide no respite from the ultimate effects of that pesky concept called reality.

 

We all know that you make the best decisions when you’re plummeting toward an abyss, right? This shameless crowd weaponizes their blatant hypocrisy. 

It’s fine to explode the debt when a Republican is in the White House and then stick the Democrats with the burden of galloping to the cliff's edge. Responsibility is for suckers.

 

It is true that our system of government was built on debate, compromise, and deliberation. But that is not what this is; this is a shakedown. This is using an existential threat to wrest concessions that would never occur in a proper legislative process.

 

Perhaps a deal will emerge that is not horrible. Perhaps it will pave the way for smoother running for the remainder of this Congress. Perhaps we will avoid the potentially catastrophic outcomes.

 

We certainly can hope for that. But let’s be clear before we get to the end game: This never should have happened. And the process is rotten no matter what transpires.

 

This pathetic political pantomime is beneath us as a nation. It is as embarrassing as it is dangerous.

 

Hopefully we’ll get some last-hour resolution and pull back from the brink. If not, the price figures to be exceptionally heavy.

Either way, can we — will we — resolve never to let this happen again?

An Honest Discussion Of The Debt Ceiling From EPI

The following article on the debt ceiling is by Josh Bivens at the Economic Policy Institute: 

U.S. Treasury Secretary Janet Yellen announced last week that the federal government had reached the statutory debt limit and that her department had begun “extraordinary measures” to meet required spending obligations. It is estimated that by July these extraordinary measures will no longer be able to keep some spending obligations from being missed.

The fact that the statutory debt limit can inject such chaos into the American political system and economy is truly odd. The debt limit measures nothing coherent and has no relationship to any serious measure of the economic burden imposed by the nation’s debt. It has as much relevance to the nation’s objective economic health as today’s horoscope. Yet if it’s allowed to bind, disaster would result. And if the price of convincing House Republicans to raise the debt limit is large cuts to federal spending, this still ensures grave damage to the economy and vulnerable families.

The debt limit—and particularly its relationship to the objective economic facts of the nation’s fiscal health—is poorly understood by too many. In this post, we make the following points about the debt limit in the current moment:

• A recession is guaranteed if the debt limit is not raised. This wound to the U.S. economy would be inflicted entirely by the irresponsibility of the Republican caucus in the House of Representatives.
  • “Reprioritization” of spending in the face of a binding debt limit—or paying some obligations of the federal government in full while inflicting much steeper cuts on other obligations—does not change the fact that a recession would result. In fact, if “reprioritization” privileges holders of U.S. debt over other spending obligations, it could make the recession worse.
• The debt limit measures no coherent economic value. Given the stakes involved, many assume that the debt limit must be some meaningful parameter that plays an important role in maintaining the fiscal health and sustainability of the federal government. This is false. The debt limit is essentially an exercise in numerology.
  • The value of what it measures—the nominal dollar level of outstanding gross public debt—has zero relationship to the economic fundamentals of the nation’s fiscal health. The debt limit is not inflation-adjusted, measures debt the government owes itself, does not include federal government assets, and is completely uncorrelated with genuine measures of fiscal health (like the debt service ratio—or interest payments on government debt divided by national income).
• A deal with spending cuts does not avoid the debt limit’s damage.Given the damage that would be done by allowing the debt limit to bind, some might think that any deal to raise it would be worth doing. But this is not right either. Deals that include steep spending cuts would also carry a high risk of causing a recession. The entire danger posed by the debt limit is that damaging spending cuts might be caused by an absurd political institution. Embracing spending cuts (even not as steep) simply to avoid the absurd political institution cannot be a serious answer.
  • A debt ceiling deal that included steep budget cuts was almost the entire reason why the economic recovery from the 2008–09 recession was the slowest in post-war history.
• The debt limit should be abolished—either formally or effectively. If Congress will not raise the debt limit without a damaging deal on spending, the Biden administration should pursue work-arounds—including potentially minting a trillion-dollar coin—to keep the debt limit from binding.

Overview

The U.S. Treasury draws on banking accounts at the Federal Reserve to fund federal governmental activities—remitting paychecks to federal government employees, sending Social Security checks, paying U.S. bondholders, reimbursing medical providers for services covered by Medicare and Medicaid, and so on. These accounts are fed on an ongoing basis by both tax revenues and the proceeds from selling bonds (debt). But since the United States has a statutorily imposed limit of how much outstanding debt is allowed, once this limit is reached on issuing new debt, Treasury can no longer sell bonds and deposit these proceeds. As a result, accounts at the Federal Reserve will dwindle as they are now only fed by incoming taxes, which are insufficient to cover all spending. If Congress does not raise the debt limit, the Biden administration does not enact any work-around, and federal spending is indeed forced to contract to a level that can be financed only by taxes, then the debt limit will “bind” spending.

Consequences of allowing the debt limit to bind spending

The U.S. is currently borrowing an amount roughly equal to 4% of gross domestic product (GDP) to finance spending. If no new borrowing was allowed due to the debt limit, this means that spending would have to fall by 4% of GDP. A spending cut of 4% of GDP is a mammoth shock, and to have it slam into the economy suddenly would be spectacularly damaging.

For comparison, the abrupt swing from borrowing to saving—known as private-sector “deleveraging”—that led to the Great Recession in 2008–2009 was about a 9% share of GDP, but that was spread over more than two years. This means that the mechanical shutdown of spending caused by hitting the debt ceiling would be about the same annualized size—but would occur even more suddenly—as the one that led to the Great Recession.

Even worse, as the negative fiscal shock rippled through the private economy, the austerity would become self-reinforcing. Say that in the first month, the 4% of GDP cutback in federal spending has a multiplier of 1, so economic activity in that month is slowed by 4% of that month’s GDP in total. (While it’s true that multiplier effects may well not happen right away, illustratively this is the dynamic we’re facing.) With GDP and incomes 4% lower, tax collections will fall by roughly 1% of GDP. So the next month, not only will the original cutback in spending occur, but lower tax collections will ratchet down spending even more—and pretty quickly!

Normally, the federal budget acts as an automatic stabilizer when recessions hit—taxes fall and spending rises and debt increases, all of which spurs economic activity. But a recession caused by an arbitrary legal rule that spending cannot exceed (falling) taxes means that the budget would actually act as an automatic destabilizer.

If the spending cutbacks occur for a month, say, and then federal transfers make up for the lost month, then much of the damage could be undone pretty quickly. But not all of it. Take the example of retirees who do not go out to eat in their local diners for a month because their Social Security checks do not arrive. If the Social Security checks start coming later and retirees return to diners—and even if the previous missed payments are made up—this does not restore the lost income to wait staff who missed a month of customers.

Finally, these are just the “mechanical” effects of hitting the debt ceiling. The ripple effects stemming from distress in financial markets that would be sparked by missing interest payments on Treasury bonds could be extreme as well. But these mechanical effects are useful to keep in mind when some misleadingly claim that Treasury can “reprioritize” payments to bondholders and hence the United States can avoid technical “default.” Prioritizing interest payments to bondholders just means defaulting even more heavily on Social Security beneficiaries, doctors’ reimbursements for seeing Medicare and Medicaid patients, federal contractors’ bills, safety net spending, and all other federal payments.

“Reprioritizing” some payments over others does not change the grim mechanical arithmetic run through above—and might make it worse. Bondholders are a relatively rich group, and much of the U.S. federal debt is held by other countries. Both of these things mean that cuts to bondholders would result in less of a spending pullback than equivalent cuts to vulnerable families. In short, “reprioritization” is default by another name, and one that makes the economic damage of allowing the debt limit to bind even greater.

The debt limit is numerology

The statutory debt ceiling is a completely arbitrary value—there is no compelling economic justification for its historical values and it is raised (or suspended periodically) purely based on congressional whim and partisan political strategizing. The absurdities in using the nominal value of gross federal debt as a high-stakes economic indicator are abundant.

For example, the debt limit is not indexed for inflation, even as many federal government payments and taxes are indexed (either implicitly or explicitly). Further, the debt limit measures gross debt, which includes debt the federal government owes itself. The biggest difference between the debt held by public and gross debt is the Social Security Trust Fund (SSTF). To help pre-fund the now-arrived retirement of the Baby Boomer generation, for years the Social Security system taxed current workers more than what was needed to pay current beneficiaries. The surplus was credited to the SSTF. As dedicated Social Security revenues fall a bit short of benefits in coming decades, the system (as designed) will draw down the SSTF. But this means that as the SSTF rose—as the Social Security system ran a surplus—measures of gross debt were actually inflated. How can that make sense?

The gross debt also excludes the roughly $2 trillion in financial assets (mostly student loans) held by the federal government. Any measure that aims to measure the balance sheet health of an entity probably shouldn’t ignore trillions of dollars in assets.

Sometimes the debt limit is defended as a useful measure to make Congress pause and be mindful about the nation’s fiscal situation. But this argument is absurd. For one, a measure meant to enforce mindfulness should not be so high stakes and subject to political opportunism. If the debt limit just forced a day of congressional debate whenever it was breached rather than forcing a sudden contraction of federal spending, this argument might make more sense. Most importantly, a prompt forcing Congress to pause and think about the nation’s fiscal health should have some empirical relationship to the nation’s fiscal health. The debt limit does not.

Given the measurement absurdities noted above, it is no surprise that the debt ceiling does not correlate at all with meaningful measures of the burden imposed by the nation’s debt. Probably the most meaningful measure of this burden is interest payments on the debt expressed as a share of GDP. This debt service ratio and the nominal value of the nation’s outstanding public debt (what triggers the debt limit) are almost entirely uncorrelated.

For example, in 1996, gross federal debt stood at $5.2 trillion. By 2019, it was at $22.7 trillion. Yet in 1996, debt service payments—the interest costs needed to be paid on outstanding debt—were 3.0% of GDP, but by 2019 they were just 1.8%. Since 2019, this debt service ratio has declined even further as nominal debt rose by another $8 trillion. The reason why interest rates have collapsed while debt has grown is simply that both variables have been driven by pronounced economic weakness over most of the post-2000 period. But the larger point is that the level of gross federal debt has no reliable relationship to any economic stressor faced by governments or households, so hinging something as high stakes as a hard limit on the federal government’s legal ability to borrow on this measure makes no sense.

A deal with spending cuts does not avoid the debt limit’s damage

People often invoke the damage done by the 2011 showdown over the debt ceiling. But they often miss what was by far the greatest damage done by the 2011 debt ceiling episode: the passage of the Budget Control Act (BCA), a piece of legislation that is relatively unknown to the lay public, but that delivered an anti-stimulus to the U.S. economy about two times as powerful as the stimulus provided by the Obama administration’s Recovery Act in 2009.

The BCA’s caps on federal spending explain a large part of why this spending in the aftermath of the Great Recession was the slowest in history following any recession (or at least since the Great Depression). If this spending had instead followed the normal post-recession path, then a return to pre-recession unemployment rates would’ve happened 5-6 years before it finally did in 2017.

The BCA was the GOP demand for raising the debt limit in 2011, and the Obama administration acquiesced to it. The leverage provided by the debt limit led directly to the worst recovery following a recession since World War II. This leverage the debt ceiling provides to those looking to enforce austerity is its greatest—and often most-overlooked—danger.

The debt limit needs to be abolished—either formally or effectively

Given all of this, it is obvious that the U.S. should join the vast majority of rich countries around the world who do not have a statutory debt limit. It would be most straightforward if Congress abolished it, but that is extremely unlikely in the near term.

For now, if Congress will not act sensibly and raise the debt limit without a damaging deal on spending, the Biden administration should act in any way it can to keep the debt limit from binding. The most fun proposed executive work-around—one that highlights the sheer stupidity of the debt limit—is minting a trillion-dollar platinum coin. If that somehow sounds not serious enough, other work-arounds certainly seem plausible as well. But it should be remembered that the least serious outcome is the one that causes the most damage: letting a wholly baseless bit of numerology—and not the needs of the American people—determine what the nation is allowed to spend.

What Should Biden Do About GOP Threat To Debt Ceiling?

How should President Biden react to the GOP's threat to refuse to raise the debt ceiling? Economist Paul Krugman has some suggestions in his column in The New York Times. Here is part of what he has to say:

We officially hit the debt limit this week, but accounting maneuvers can postpone a crisis for several months. But what happens when those maneuvers are exhausted? The operations of the U.S. government will be disrupted — Republicans’ claims they have a way to “prioritize” payments, honoring some promises but not others, in ways that limit the damage are almost surely nonsense. Even if, say, interest payments can be maintained, we would leave everyone, from investors to vendors, wondering whether America can’t be trusted to pay its bills.

Furthermore, U.S. debt plays a special role in world markets, which treat federal obligations as the ultimate safe asset, collateral for many transactions. If investors lose confidence that the U.S. Treasury will honor its promises, there could be a global financial meltdown (which almost happened in March 2020, when markets, rattled by Covid-19, made a rush for cash).

A debt crisis, then, would be bad and possibly catastrophic. So should Democrats give in to Republican demands?

No. A party that barely controls one house of Congress shouldn’t get to impose deeply unpopular policies on the nation as a whole.

And it’s not even clear that the Biden administration could surrender if it wanted to. The current crop of House Republicans makes the Tea Party, which (alas) used the debt limit to blackmail President Barack Obama, look reasonable. Today’s G.O.P. doesn’t even seem to have a coherent set of demands; a significant number of caucus members may well want a crisis, preferring to “watch the world burn” under a Democratic administration.

What, then, are the alternatives? I see three major possible routes.

First, while it remains baffling that Democrats didn’t raise the debt limit while they still controlled Congress, there could yet be a legislative solution: Democrats could seek a “discharge petition” to force a vote on raising the debt limit despite opposition from G.O.P. leaders. This would both take time and require support from a handful of sane Republican House members. But it’s surely worth trying.

Second, it’s probably possible to use financial engineering to bypass the debt limit. The most famous proposal calls for minting a platinum coin with a face value of, say, $1 trillion, depositing that coin with the Federal Reserve and spending out of the bank account thus created. Believe it or not, this would almost certainly be legal.

Another option would involve raising money by issuing “premium bonds” when existing debts come due — bonds whose face value is the same as that of the bonds they replace, so that they don’t officially increase the debt, but offer high interest rates, so they sell for much more than their notional value.

These would, of course, be financial gimmicks. So? If it takes gimmickry to frustrate the schemes of destructive extremists empowered by a legal quirk, and thereby avoid financial catastrophe, so be it.

Finally, there are a couple of what I think of as constitutional options. The 14th Amendment to the Constitution says that the validity of public debt “shall not be questioned,” which might be construed as a reason to ignore the debt ceiling rather than default on payments.

Alternatively, it seems fair to say that the White House is facing incompatible demands. Congress has, through duly enacted legislation, specified levels of federal spending and taxes; but one house of Congress appears poised to tell the president that he can’t raise the money he needs to obey the previous legislation. Since it seems that President Biden can’t avoid breaking at least some laws if the debt ceiling isn’t raised, ignoring the debt ceiling may be the “least unconstitutional” option.

Which option should Democrats pursue? I’d say all of them. Above all, this is no time for officials to worry about seeming silly or undignified. The Biden administration is facing the threat of economic terrorism — that sounds extreme, but it’s basically what creating an artificial debt crisis amounts to. And it should do whatever it takes to face down that threat.

Minting Platinum Coins Would Avoid The Debt Ceiling Crisis

 

The extremists in the Republican House are trying to put President Biden between a rock and a hard place. He is required to spend the money Congress allocated, but would not be able to raise the funds to do so if the debt ceiling is not raised. What is he to do?

Ryan Cooper, at MSNBC.com, has a solution. He thinks President Biden should mint platinum coins. It's a bizarre solution, but not more bizarre that the extremist Republicans trying to trash the U.S. economy. Here is part of what Cooper has to say:

There is one aspect of the debt limit issue that has gotten little coverage: It would be just as illegal to obey the limit as it would be to ignore it. If Republicans refuse to raise the debt ceiling, they will put the president in a bind: requiring him to spend, but forbidding him from borrowing the necessary money. Biden would have no way out — unless he opts for the platinum coin loophole. Without the coin, the president would violate the law one way or another. It’s hard to see why he would choose the option that causes an economic crisis.

Treasury Secretary Janet Yellen said that on Thursday the department will begin on various accounting shuffles to stave off actually breaching the debt ceiling, but the tricks are estimated to run out as soon as June. Republicans have not agreed on a set of demands for ransoming the world economy, but some hard-liners have mentioned one dollar of spending cuts for each new dollar of debt, cutting spending back to 2022 fiscal year levels, repeal of new funding for the IRS, and rollbacks of abortion rights. In the meantime, the House GOP is reportedly working up a payment prioritization plan that would defund everything except interest payments on the national debt, Social Security, Medicare, veterans’ benefits and the military.

Basically, they want Democrats to repeal all their hard-won legislation from last year, or to shut off something like a quarter of the government — including “Medicaid, food safety inspections, border control and air traffic control,” per The Washington Post —indefinitely. But any such measures would have to be passed by both Senate Democrats and Biden, both of whom have dismissed any concessions out of hand. Moreover, experts agree that prioritizing payments would be logistically impossible, given the huge volume of payments the government makes every day.

On the other side, during the lame-duck session Congress passed a $1.7 trillion spending bill that keeps the government funded through September, which Biden signed into law on Dec. 29. That’s the legal bind: Congress instructed the executive branch to operate the government at specific spending levels through the end of the fiscal year, but now is refusing to grant it the borrowing authority necessary to carry out its own instructions.

All this is why the famous platinum coin is Biden’s most legally defensible option, despite how silly it sounds. A 1997 law clearly grants the treasury secretary the ability to mint platinum coins of any denomination, in part with the intended purpose of making profit for the government through seignorage. If Congress says that the president must spend, cannot borrow, but can mint, then the way is clear for a legal stickler. Mint a trillion or two in platinum coins, deposit them at the Federal Reserve, and hey, presto, problem solved. Economically, it would be virtually identical to borrowing the money, and presumably at some point the ceiling could be raised and the coin spending replaced with normal debt. . . .

If the debt ceiling is hit, and the coin is ruled out, then Biden must pick which legal violation he will commit. Surely any sane person would choose the option that doesn’t cause drastic and utterly pointless harm to the global economy. That choice becomes even clearer when one considers that the debt ceiling itself is arguably unconstitutional under the 14th Amendment, which states, “The validity of the public debt of the United States, authorized by law … shall not be questioned.” As President Abraham Lincoln arguedwhen Chief Justice Roger B. Taney tried to stop him from locking up a man accused of treason during the Civil War, “Are all the laws but one to go unexecuted, and the Government itself go to pieces lest that one be violated?”

House Republicans, most of whom voted to overturn the 2020 election, are utterly in thrall to QAnon lunatics. They are ignorant and unhinged enough to blow up the world economy either so they can blame it on Biden or simply revel in the resulting chaos and destruction. The idea that it could be a bipartisan vote, as Senate Majority Leader Chuck Schumer, D-N.Y., has advocated, is wishful thinking. Something like the platinum coin will very likely be necessary to stave off disaster. Biden must steel himself to break the debt ceiling forever using his own power.

House Republicans Are Preparing To Trash The U.S. Economy

The following is part of an article in The Washington Post: 

House Republicans are preparing a plan telling the Treasury Department what to do if Congress and the White House don’t agree to lift the nation’s debt limit later this year, underscoring the brinkmanship newly empowered conservatives will bring to the high-stakes negotiations over averting a U.S. default, according to six people aware of the internal discussions.

The plan, which was previously unreported, was part of the private deal reached this month to resolve the standoff between House conservatives and Rep. Kevin McCarthy (R-Calif.) over the election of a House speaker. Rep. Chip Roy (R-Tex.), a leading conservative who helped broker the deal, told The Washington Post that McCarthy agreed to pass a payment prioritization plan by the end of the first quarter of the year.

The emerging contingency plan shows how Republicans are preparing to threaten to not lift the nation’s debt ceiling without major spending cuts from the Biden administration. Congress must pass a law raising the current limit of $31.4 trillion or the Treasury Department can’t borrow anymore, even to pay for spending lawmakers have already authorized. Economists warn that not raising the debt limit could cause the United States to default, sparking a major panic on Wall Street and leading to millions of job losses.

Treasury Secretary Janet L. Yellen said Friday said that the Treasury Department will begin “extraordinary measures” next week to ensure the federal government is able to meet its payment obligations but that it cannot guarantee the United States will make it beyond early June without defaulting. White House press secretary Karine Jean-Pierre reiterated Friday that the administration will not negotiate over the debt ceiling.

Treasury Department aides declined to comment on the GOP plan, and a spokesman for McCarthy did not return requests for comment.

In the preliminary stages of being drafted, the GOP proposal would call on the Biden administration to make only the most critical federal payments if the Treasury Department comes up against the statutory limit on what it can legally borrow. For instance, the plan is almost certain to call on the department to keep making interest payments on the debt, according to four people familiar with the internal deliberations who spoke on the condition of anonymity to describe private conversations. House Republicans’ payment prioritization plan may also stipulate that the Treasury Department should continue making payments on Social Security, Medicare and veterans benefits, as well as funding the military, two of the people said.

Such a move would be unprecedented and hugely controversial, and even releasing the plan could turn into a major political liability for the GOP. A hypothetical proposal that protects Social Security, Medicare, veterans benefits and the military would still leave out huge swaths of critical federal expenditures on things such as Medicaid, food safety inspections, border control and air traffic control, to name just a handful of thousands of programs. Democrats are also likely to accuse Republicans of prioritizing payments to U.S. bondholders — which include Chinese banks — over American citizens. . . .

The idea poses logistical hurdles as well. In 2011 and 2013, when similar debt ceiling crises loomed, Treasury Department officials in the Obama administration said prioritizing payments was not technically possible, given the complexity of the millions of payments the federal government makes each day.

For the plan to be binding on the Treasury Department, it would have to pass not only the House but also the Democratic-controlled Senate, and President Biden would have to sign it into law.

Even if it were enacted, a debt prioritization plan could still jeopardize the trustworthiness of the U.S. government, some experts say. The proposal would call for the government to halt payment for as much as 20 percent of money that it has already promised to spend. . . .

These efforts are expected to prove controversial even among some GOP allies. Neil Bradley, executive vice president of the U.S. Chamber of Commerce, said the business group opposes prioritizing payments.

“Prioritization doesn’t work. We had this discussion a decade ago,” Bradley said. “If the U.S. government skips its payments to America’s seniors or skips its payments to bondholders, both of those things call into question the full faith and credit of the United States government and our commitment to paying our bills. And both of them have pretty catastrophic economic consequences.”

Some Republican policy experts have been convinced such efforts would fail. Brian Riedl, a policy analyst at the Manhattan Institute, studied prioritization plans at length while he was a staffer in the offices of then-Sen. Rob Portman (R-Ohio). Riedl said such a plan would involve lopping off about 20 percent of federal spending immediately, or about $1 trillion, because revenue covers only roughly 80 percent of the $5 trillion the government spends each year. Huge numbers of people could be hurt immediately, he said, with no good way to pick between options such as forcing hospitals to deal with the cessation of Medicare payments or depriving the Defense Department of funding.

“Studying this in 2011 convinced us this would be a really bad idea and something we really did not want to happen,” Riedl said. “We didn’t end the exercise saying, ‘This is feasible and smart.’ We said, ‘Let’s avoid this at all costs because it’s going to be a disaster.'”

McConnell "Blinks" - But He Remains On The Hot Seat

It looks like the debt ceiling fight is over -- for now. Afraid that he and his party would be blamed for a default if they continued to filibuster raising the debt limit, Minority Leader McConnell agreed to stop the filibuster and allow Democrats to raise the debt ceiling for nearly two months. But the fight is not over. The same thing is going to be repeated near the first of December.

McConnell wants Democrats to raise the ceiling using the reconciliation process, and says the short delay will give them time to do that. He could then tell voters that Republicans tried to stop the Democrats, but failed to curb their spending. It would be a lie, but that's what he wants.

But Democrats are not interested in playing his silly game. They have no intention of using reconciliation to raise the debt ceiling. They will dare the GOP to repeat its obstruction in December.

And the position held by McConnell and the Republicans is untenable. They cannot force Democrats to use reconciliation -- and if they block raising the debt ceiling and cause a default, they will be the ones to blame. The public will see it was the Republicans who voted for default, and the Democrats who voted against it.

McConnell will have to "blink" again in December. The normally Republican business community will force him to do so.

Cruz Tells Huge Lie To Justify Filibustering Debt Limit Raise

The House has passed a funding bill to keep the government running past September 30th. Included in the bill is a suspension of the debt limit (which needs to be raised pretty soon to keep the government from defaulting on its debts). The bill now goes to the Senate. But in the Senate, Ted Cruz has already said he would filibuster raising the debt limit -- and he has told a huge lie to justify that filibuster.

Steve Been explains at MSNBC.com:

Sen. Ted Cruz indicated last week that he intends to push the nation closer to a deliberate, self-imposed crisis, and as NBC News reportedyesterday, the Texas Republican isn't backing away from his threat to crash the economy on purpose.

Sen. Ted Cruz, R-Texas, promised to filibuster it, saying there is 'no universe' in which he would consent to allowing a simple majority vote on extending the debt limit.

The GOP senator added that extending the debt limit would make it "easier for [Senate Majority Leader] Chuck Schumer and the Democrats to add trillions more in debt."

That doesn't make any sense.

There are plenty of members of Congress who are badly confused about the substantive details of governing. As a rule, Cruz isn't one of them. I've long argued that the Texas Republican's principle political problem is not that he's dumb, but rather, that he assumes everyone else is dumb.

His comments on the debt ceiling capture the problem nicely. As Cruz surely knows, raising the debt ceiling allows the United States to pay its bills, not to clear the way for new spending. The process is about paying for the stuff Congress already bought in the past, not giving lawmakers approval to buy new stuff in the future.

The GOP senator, in other words, is preparing to block important legislation — a bill that would prevent the United States from defaulting on its obligations for the first time in our history — based on a rather obvious lie.

If Cruz follows through on his gambit and his effort succeeds, the results would be catastrophic. As The Washington Post's Catherine Rampell explained in her new column:

The government would have trouble paying Social Security checks, military salaries and all the creditors who'd previously lent money to Uncle Sam. A default would also violate the Constitution, which says 'the validity of the public debt of the United States ... shall not be questioned.' Finally, it would trigger chaos throughout the global financial system. Financial markets currently treat U.S. debt as virtually risk-free, with all other assets benchmarked against it. If we demonstrate that our debt is not really risk-free — that we're instead cavalier about repaying our creditors — panic would tear through other markets as well.

Again, Cruz knows this. So do McConnell and many other congressional Republicans. They've decided to play with matches anyway, even if it's their own country's economy that burns.