Debt Limit Madness 2017!

So we’re about to hit our first true potential drama of the Trump administration. The debt limit is coming fast, and possibly faster than people thought given tax receipts are slower than expected.

So this is going to heat up in the coming weeks.

Let’s recall the halcyon Obama days, when Republicans, led by Ted Cruz, continually used the debt limit as leverage to try to extract concessions for the President. It actually worked once, and then Obama said “no more,” and flatly refused to consider anything but a clean debt limit bill.

And really, Republicans had no leverage after all, because the fallout from the US busting the limit is unknown, but probably very bad. Hell, just the potential of us doing so caused our debt to be downgraded for the first time ever.

So, now the shoe is on the other foot, we have Republicans in power. But there is some collar pulling by Republican leaders because there is enough dissent among their own party to increasing the debt limit without budget cuts that they will need Democratic votes even for a clean debt limit raise.

But never fear, because Democrats for years decried Republicans for trying to leverage the good faith of the United States for policy concessions, so they’re totally on board to vote for a clean bill, right?

Not so fast!

Full story here

This is one of those things that could get resolved very quickly and easily if Republican and Democratic leaders met and decided just to pass a clean debt limit raise, even to the objection of some in their parties. But these are the same people who managed to trigger the budget sequester apocalypse, so snatching defeat from the jaws of victory is a real possibility here.

Meanwhile, nobody still knows what happens if we blow through the debt limit. There are lots of theories, and I’m sure there are Republicans who suggest it’s no big deal, but nothing concrete.

Oh, and Trump has never even brought it up, so he either hasn’t been briefed or thinks the whole thing is so confusing that even he doesn’t have an opinion about it. Or maybe he’s waiting for the topic to come up on Fox & Friends before he decides what his stance is.

So let’s talk about this!

Depends what you mean by blow through the limit. If you just mean keep borrowing regardless, then you have a constitutional crisis, but not a financial one. If you mean default, you have a financial crisis, whose seriousness will depend on the means of default and the perception of how quickly it will be resolved. A “technical” default will probably be manageable, but anything else would be disastrous.

You also didn’t mention that the most important people in the cabinet on this issue, Mulvaney and Mnuchin, are at loggerheads over it.

I’d argue that a default is a constitutional crisis, since the Constitution specifically says you can’t do that.

Fair enough, though on a literal/strict reading we’ve already had that crisis many times over.

Certainly a default would be a worse crisis than just carrying on borrowing.

Started hearing about this last week. Getting anything tax or health-related was already going to be an uphill battle. I think democrats will drag their feet on the debt limit as long as possible because it’s going to keep other things from getting done and a credit downgrade will end up eroding GOP support. It looks bad that they control everything but can get nothing done.

I sure hope not. Fuck “eroding GOP support” if it means damaging the country. That’s the type of shit that I loathe about the modern GOP, I’m going to be pissed if the Democrats end up doing the same.

I don’t disagree, but that’s what is going to happen, IMO. Maybe bipartisanship isn’t dead, but it’s on life-support at best.

I’ve said it before, but it’s the only job I know where people get paid a lot of money to not do their jobs.

Our system of government is broken right now. and as long as most of our politicians continue to put party before country, nothing will change.

The Dems should demand that Trump does the ACA corridor payments period as a condition. That’s something where they could win, because it would lower premium raises.

Right now, a short-term economic crash might be what is needed to wake Trump’s base up.

I don’t mind the Dems putting a real scare into the Republicans, but I agree that they shouldn’t let a default happen.

The wildcard is Trump, though. This is the guy that believes declaring bankruptcy is a legitimate negotiating tool.

How do they do the former without resorting to the latter? Or do you just mean they bluff?

For me, Democrats resorting to the same obstructionist and irresponsible behavior is going to drive me to vote for neither party. Scoring points for your party is one thing, but holding the country hostage to do so is terribly irresponsible.

Yeah this is insane. Everyone knows the Dems aren’t crazy enough to actually let the US default, so there’s no leverage here. Why fight a battle you know you’re going to lose?

You mean like how they forced the nuclear option on the Gorsuch nomination? Maybe you should rethink that.

Note: I agree with you, but that’s not the point

He’s running government like a business!

The debt ceiling has been a source of political Kabuki since the “Republican Revolution” of the 90s. "Nobody should assume we’re going to have a debt-limit extension. If the vote were held today, it would not pass” said John Boehner in 1995. But Boehner was bluffing. No Republican of the 1990s actually wanted to hurt America and set fire to a giant pile of money, no matter how well doing so polled.

Then cargo cult Republicans came to believe that their talking points were core principles. Being “against the debt ceiling” evolved from a way to gain leverage in a divided government into the view that default was acceptable because Republicans could pin the blame Obama and the Democrats to the point where Republicans now want to take credit for default.

I think turning the debt ceiling into a political football was awful, but Republicans turned the debt ceiling into a source of horse trading. It’s going to take an act of political goodwill and bipartisanship to make the debt ceiling sacrosanct, and that’s in short supply these days.

Besides, the totally crazy thing about this is that the Republicans control the White House and both chambers of Congress. If the sane Republicans need the support of Democrats to pass key legislation, I think it’s fair for the Democrats to ask for some reasonable concessions. That’s how it’s supposed works when you need the votes of members of the opposition.

Sure, it makes sense to want to have a functioning government and reasonable adults actually dealing with stuff, but at the end of the day, if it’s only one side that ever gives way, you’ll end up on the other side sooner or later.

I still don’t understand why we just don’t get rid of the debt ceiling. It an anachronistic holdover from WWI.

Because it’s useful for politicians to use as a throwing weapon? And because it’s now a religious issue for some, and good luck with those…

I think if we get all three branches Dem in 2020 it’s gone when they nuke the filibuster.

Forgive my ignorance (I’m no economist) but wouldn’t the counter argument to that be, “why don’t we just print endless amounts of currency so we can pay the debts?” Is value of currency not tied into the national debt in some way?

If you mean, “Does the US government need to make up for inflation when they repay a US government bond?” the answers is: Nope. The US debt is denominated in US dollars. If the US dollar happens to be worthless at the time when the debt is repaid, that’s just hard luck for the lender/bond purchaser.

Of course, the entire reason the US government is able to do this is that lenders trust the US government not to inflate its way out of its debt. Some other countries have less sterling reputations, and have to issue international loans denominated in another country’s currency (say … the US dollar) to try to assure the lender that they won’t inflate their way out.