Republicans have no coherent 'fiscal proposals' as they 'hold the debt ceiling hostage': columnist

04 April 2023

Countless economists, from the New York Times' Paul Krugman to Mark Zandi (chief economist for Moody's Analytics), have been warning that the United States will face a major economic crisis if it defaults on its debt obligations. In an analysis prepared for the Senate Banking Committee's Subcommittee on Economic Policy in early March, Zandi and some colleagues estimated that a debt default could lead to a loss of 7 million jobs in the U.S. and a 2008-like economic crisis.

Democratic President Joe Biden and Senate Majority Leader Chuck Schumer (D-New York) have both made it clear that they are willing to negotiate with Republicans in good faith in order to avoid an economic calamity, but Republicans in Congress haven't been able to reach a consensus about what they want. Krugman has accused Republicans, especially members of the far-right House Freedom Caucus, of resorting to blackmail in the hope of butchering Social Security and Medicare.

In an opinion column published on April 4, the Washington Post's Catherine Rampell laments that Biden is dealing with a lot of Republicans who aren't big on specifics.

Rampell argues, "How do you negotiate with someone who has no idea what they want? That's the challenge for President Biden as Republicans say he must: (A) satisfy their fiscal demands before they'll raise the debt limit; even though they (B) can't decide what those demands actually are; and they (C) have zero credibility for delivering 218 House votes for whatever those demands eventually turn out to be."

The columnist points out that Republicans in Congress who weren't worried about the federal deficit when Donald Trump was president rediscovered fiscal conservatism after Biden was sworn into office.

"Republicans were fine with the last president signing $4.7 trillion in new deficits into law even before COVID-19 hit, plus trillions more thereafter," Rampell observes. "Now that a Democrat is president, though, the GOP's born-again deficit hawks decided that something must be done about the nation's fiscal health. It's not clear what something is, however, beyond taking a valuable hostage: the nation's debt ceiling. That's the statutory limit on how much the government can borrow to pay off bills that previous Congresses already agreed to."

The columnist continues, "Not raising the debt ceiling would force the federal government to renege on some of those commitments, possibly missing payments on obligations such as interest payments, Social Security benefits and military salaries. The other potential consequences of an even accidental default include, in the near term, a global financial crisis; and, in the longer term, higher borrowing costs, because the United States would no longer look like the safe, reliable borrower we have always been."

Rampell takes issue with some of Biden's "fiscal proposals" — for example, "extending most of the Trump tax cuts." But she stresses that unlike Republicans, at least Biden has proposals.

"Republicans, on the other hand, appear to have abandoned any pretense of a counteroffer," the columnist warns. "They have no budget, nor even the basic outlines of one."

Read Catherine Rampell’s full Washington Post column at this link.

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