You know, the Republicans are going to have to raise the debt ceiling, and this time they’re going to have to provide the votes to do it. It isn’t an option. Yesterday, Treasury Secretary Steven Mnuchin sent a letter to Speaker of the House Paul Ryan explaining that he was already suffering from a shortage of funds:
Mnuchin, in a letter to Ryan, said Treasury was now suspending the sale of certain state and local securities, a practice the federal government normally performs to assist with tax policies. Treasury will soon likely suspend payments to certain pension funds as it tries to delay, as long as possible, falling behind on other payments. Eventually, though, it will run out of options and not have enough money to pay its bills.
“As I said in my confirmation hearing, honoring the full faith and credit of our outstanding debt is a critical commitment,” Mnuchin wrote to Ryan. “I encourage Congress to raise the debt limit at the first opportunity so we can proceed with our joint priorities.”
It’s always difficult to forecast precisely, but budget experts expect that sometime in August or September the government will begin defaulting on payments. That gives Congress a window of time to authorize more borrowing, but that doesn’t mean that they’ll easily find the votes they’ll need. Of course, the Democrats could provide an assist by giving the Republican leaders a little support, but they have no incentive to do so other than a generic interest in not seeing our government lose its credit rating and the resulting global economic chaos that would result. They’re less willing to treat the full faith and credit of the United States as a hostage than the lunatics in the Republican Party, so there’s a chance that they can be convinced to come to the rescue.
But, they obviously should exact concessions if they’re expected to play that role.
We’ll have to see what the Congressional Budget Office has to say about the impact of the Republicans’ health care bill, but that’s only the beginning of their plans to slash revenues and increase spending. Trump wants to spend a trillion dollars on infrastructure and he’s hoping to sign a tax reform bill that will dramatically reduce how much money the government collects from corporations and high income citizens. He’s also looking to spend tens of billions more on defense, which probably will not be fully offset by gutting the Coast Guard, State Department and Environmental Protection Agency.
Deficit spending should spike in much the same way it spiked under Reagan and Bush the Younger, meaning that the debt ceiling will be a recurring problem.
The Democrats have very little leverage to influence policy or stop legislation they don’t like, and so far they aren’t being consulted or asked to provide support for any of Trump’s policies.
It’s an odd thing that Trump ran successfully by trashing the Republican Establishment but then decided to govern in a way that is completely dependent on them. The Democrats are correct to respond with unflinching resistance, but they should at least explore how the possible inability of the Republicans to raise the debt ceiling on their own will present them with an opportunity to have a say on policy. They have leverage, so the question is really what they can achieve with that leverage.
It could be as simple as helping craft an infrastructure plan that isn’t a giant looting scheme or something more mundane like a slate of nominees placed on bipartisan commissions. Whatever it is, it shouldn’t come cheap. The Democratic leadership needs to figure out what their “ask” will be. And, needless to say, if Mitch McConnell eliminates the filibuster for Supreme Court judges, the Democrats should be willing to let the world burn before they give any votes to raise the debt ceiling.