“This is an urgent message! If you do not respond within 24 hours, we will be forced to terminate your account and foreclose on your assets!”
You’ve probably received voicemails or emails like this that sound simultaneously threatening and vague. Chances are the messages came from scammers hoping to scare you enough that you’d be tricked into making a mistake like providing sensitive information or sending them money.
It’s not just overly trusting elderly widows, though, who are susceptible to these tactics. Over the years, some congressional Republicans have proven that they’re easily frightened by the suggestion that some poorly defined, scary economic outcome will occur if they don’t “act now!”
In the latest debt ceiling saga, conservatives started out boldly enough. In April, along a near party-line vote, the House passed a $1.5 trillion debt ceiling increase that cut and capped spending so that—if faithfully implemented over the next decade—it would mean that our debt would “only” climb from $31 trillion to $46 trillion, instead of the $51 trillion we’re set to hit along our current trajectory.
The House-passed Limit, Save, Grow Act includes upfront discretionary spending cuts, caps spending growth, repeals President Joe Biden’s trillion-dollar Green New Deal boondoggle, stops illegal student loan cancellations, rescinds unobligated COVID-19 funds and supplemental funds for more IRS audits, ensures work requirements for able-bodied welfare recipients, and provides important reforms to streamline permitting processes for energy projects and stop the growth of the regulatory state.
While it wouldn’t solve our debt problems, the House bill is a very solid piece of legislation and would be a good step in the right direction.
But after a several-weeklong steady drumbeat of dire warnings from the Biden administration and a compliant media about the danger of hitting what they ominously call the “X date” without a debt ceiling increase, Republican leadership is now ready to settle for a stripped-down version of their bill that would only modestly slow the onslaught of deficits and new debt.
The rushed agreement between Biden and GOP leadership, named the Fiscal Responsibility Act, includes minimal upfront spending cuts—only 9% of the fiscal year 2024 cuts offered by Limit, Save, Grow—and only includes two years of binding caps on spending growth. It would no longer stop the corporatist Green New Deal subsidies or the illegal student loan cancellations, and it rescinds only 2% of the extra money for the IRS.
The debt ceiling agreement includes minuscule work requirement increases for Supplemental Nutrition Assistance Program recipients and hollows out the solid deregulatory wins of Limit, Save, Grow.
Why did GOP leadership concede so much, instead of insisting that Biden meet them at least halfway?
As the White House dragged its feet on its way to the negotiating table and the X date drew nearer, the chorus of media voices repeating the sky-is-falling refrain grew louder, similar to those messages from scammers:
“This is an urgent message! If you do not respond by June 1—correction, June 5—we will be forced to default on the debt and unleash chaos on the world economy!”
Even some supposedly conservative, but establishment-oriented, media got in on the game. The Wall Street Journal claimed that a “default would be catastrophic” and that Treasury-issued debt is “the core of the U.S. economy”—not the American worker, not entrepreneurs, but debt.
Setting aside the odd placement of debt as the keystone of the U.S. economy, the media’s vague, threatening statements about the dangers of default are simply wrong, as reaching the X date without a deal wouldn’t mean a default on our debt.
Passing the actual X date would simply mean that for the time being, the federal government would have to live within its means, spending no more than the revenue it raises. There’s no reason we can’t do that while continuing to pay the interest owed on the debt. After paying roughly one-seventh of federal revenues to service the national debt, the Treasury would still have more than enough revenue coming in to fund essential government functions.
A brief, partial shutdown of nonessential functions or delays in agency funding wouldn’t be catastrophic. It’s also entirely possible that the Treasury could employ measures to avoid even a partial government shutdown for many weeks or even a couple of months, because on June 15—a mere 10 days after the Treasury-declared X date—a large influx of revenue is anticipated as companies’ quarterly estimated tax payments come due.
Of course, if you’ve listened to the doomsaying from the White House and the media over the last several weeks, you’d think that reaching the X date would force a full default on our debt and prevent the government from paying Social Security, Medicare, veterans benefits, and military salaries.
The rhetoric coming from the White House and media almost made it sound like the only parts of the government that would be protected from delayed payments are foreign aid and the salaries of bureaucrats, regulators, and politicians.
Congressional conservatives shouldn’t worry about the establishment media; they should worry about the American people. After all, many Americans have started tuning out the media’s hyperventilation.
Just days before the X date, polls from both CNN and Fox News showed that only about a quarter of Americans supported raising the debt ceiling without spending cuts, despite a barrage of media suggesting that tying a debt ceiling increase to spending cuts was akin to “economic hostage-taking,” “economic terrorism,” “extortion,” or “self-imposed economic disaster.”
Congress could provide the Treasury a very small one-time bump in the debt ceiling to ensure it makes it from June 5 to the expected June 15 influx of tax revenue. But conservatives in Congress should hold firm; go back to the negotiating table to restore the promise of Limit, Save, Grow; and come back with a bill that is truly worthy of the American people.
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