Key House Republicans want to cut Medicare and Social Security so much that they are willing to risk a global financial crisis over it.
Their weapon? The debt ceiling, an arbitrary and purely political limit on federal borrowing that has no meaningful connection to the health of the economy. It’s a wacky problem and one that demands an equally wacky solution.
The debt ceiling does not limit what the government can spend. This limits the amount the Treasury can borrow to pay for expenses that Congress has already required. Refusing to raise the debt ceiling is tantamount to prohibiting the government from paying a Congressional debt that has already been incurred.
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If that happened, it would destroy the full faith and credit of the United States, bring down our national credit rating, and plunge both the American and global economy into crisis. It could destroy 6 million jobs and wipe out $15 trillion in household wealth in this country alone.
It’s not about deficits
Republicans say it’s about cutting the deficit, but their actions say otherwise.
The ballooning deficit since 2001 has been caused in large part by unfunded wars, exorbitant tax cuts for the super-rich and corporations, and runaway spending by the Pentagon. More of the same has helped Trump add nearly $8 trillion to the national debt in just four years, a rise that began long before the pandemic.
Yet under Trump, Republicans simply suspended the debt ceiling.
And now, in the same breath as they complain about deficits, they’re asking for more tax cuts for the wealthy — and many want more Pentagon spending, too. Financially responsible, they are not. They are practicing pure political fraud, using the debt ceiling to make the average American’s welfare pay for these ideological demands.
That’s exactly what they did after they took control of Congress in 2011. At the time, the Democrats acquiesced, which resulted in the passage of the so-called Budget Control Act, a devastating economic austerity program that delayed our recovery from the Great Recession by five to six years. , according to the Economic Policy Institute.
If the law gets its way today, all mandatory spending, including Social Security and Medicare, veterans programs, housing and nutrition assistance for struggling families, the support for farmers, small businesses and students, and the Affordable Care Act grants that help insure tens of millions of Americans — could be fodder for the chopping block.
What can be done?
It can’t happen. But a debt cannot default either. So what can be done?
The only responsible policy is to remove the debt ceiling. But with hardline Republicans in the political theater and looming economic calamity, it’s unlikely to get through Congress.
Well, this wacky problem demands a wacky solution: the Biden administration should just strike a very, very big coin. That way, he could spend the money that Congress has legally asked him to spend — without borrowing the money that Congress won’t let him borrow.
The Biden administration has resisted the idea of ”Really Big Coin,” but it’s perfectly legal. In fact, it would help the administration fulfill its constitutional obligation under the 14th Amendment, which states that the faith and credit of the United States can never be questioned.
Some observers have called on Biden to make it a trillion dollar coin. I say mint a bazillion dollar coin – and put that far-right nonsense to rest with a touch of productive absurdity.
Then we can push for a budget that raises incomes through fair taxes and makes necessary the social investments that help us all. You know, rule.
Karen Dolan is a poverty expert and fellow at the Institute for Policy Studies.
Learn more about the debt ceiling
James K. Galbraith: The debt ceiling is a farce, not a crisis
Alain Sloan: The arcane law Biden should invoke to bypass the debt limit
Why the US debt ceiling is already worrying stock and bond investors