By Denny Gulino
WASHINGTON (MaceNews) – When members of Congress prepare to leave on their next recess the Friday before Memorial Day, the debt-limit showdown will likely have been decided and House Speaker Kevin McCarthy will likely have seen his carefully built barriers to agreement be demolished like toothpicks in front of a freight train.
That won’t necessarily be good news, The nation’s unsustainable fiscal policy will be left in place as relief among policymakers takes the place of any urgent action to change the ominous trajectory of the national debt.
For now, however, the drama must play out as it has many times before. As Treasury Secretary Janet Yellen said in her letter Monday to congressional leaders, “We have learned from past debt-limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers and negatively impact the credit rating of the United States.”
By declaring that Treasury’s bill-paying powers could freeze “potentially as early as June 1” Yellen is going through the same motions as her predecessors as the countdown gets serious. She notes that deadline could be “a number of weeks” off. Again, that pre-holiday weekend will be likely be put-up time if it all hasn’t been settled beforehand.
It’s also likely that some face saving way for McCarthy to back down will be devised among his allies and the House Democratic Leader Hakeem Jeffries as that freight train’s whistle can be heard in the distance. No one believes McCarthy can keep a handful of his fellow Republicans from caving as the threat of stopping Social Security payments solidifies. And a handful is all it takes.
Default would trigger so many other bad outcomes that as they become better defined day by day knees start to buckle. Were Republicans to be blamed for the catastrophe their party’s future in the political arena would sharply diminish. Of course, such a cataclysmic failure would blacken the entire Congress, imperil President Biden’s reelection hopes and unleash dark forces beyond the nation’s shores as well.
Which is why default won’t happen. Meanwhile, damage is being done, self-inflicted to be sure. A debt limit seemed a good idea at the time during World War I, reinforced in 1939 and 1941, when it wasn’t clear the limit was the legislative cul-de-sac it was to become. Impossible to get rid of and impossible to live with, the debt limit became a time bomb that repeatedly has to be disarmed at the last minute.
The artificial statutory debt limit has not made it any easier for the world’s leading democracy to impose the self-discipline necessary to avoid the real debt limit, the one imposed by the world’s credit and currency markets when national credibility finally runs out some day.
For now, the X-date freight train approaches while the players rehearse their well-worn scripts and pretend it all makes sense.
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Contact this writer: denny@macenews.com
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