The Debt Ceiling Crisis Is Here

Most people do not seem to understand how close we are to economic ruin.

by Justin Rosario

Last November, the much-hyped “Red Wave of 2022” turned out to be a red trickle. Unfortunately, a little over a week later, Republicans managed to limp over the finish line and retake the House. A few days after that, my wife Deb and I started preparing for Armageddon.

Democrats had the opportunity to do away with the debt ceiling. At the very least, they had the opportunity to raise it until after the 2024 election which would almost certainly see Democrats back in control of the House. Instead, they allowed Joe Manchin to call the shots. Now, a pack of drunken monkeys has a nuclear bomb and they’re tripping over each other to see who can push the button first.

The debt ceiling crisis is here and most people do not seem to understand how close we are to economic ruin.

Objects are closer than they appear

Honestly, I would have written 10 more articles (at least) about this since I wrote this two-parter back in January, but that probably would have been overkill. The press, for their part, has done a fantastic job in making sure that the public knows that the debt ceiling crisis is coming. They have done an equally fantastic job in making sure the public has absolutely no idea what it really means or who is responsible. 

To understand how much effort had to be put into this, imagine a lunatic has a gun pointed at the head of the president and is demanding the murder of the NY Giants. The police are refusing to kill an entire football team and the reporting is so deliberately vague and sloppy, the public is blaming the lunatic, the police, and the president for the entire situation. That’s where we are right now. That’s what your “liberal” press has been hard at work doing. The GOP must be laughing themselves silly at how easy this has been.

The White House has been frantically trying to explain how devastating breaching the debt ceiling will be. The Washington Post has the details:

In the report, the White House Council of Economic Advisers compared the potential economic impact of a debt ceiling breach to the 2008 Great Recession, in which economic growth contracts sharply and unemployment surges. The nightmare scenario of a “protracted” standoff over the debt limit — or one that lasts about three months — would lead to a 6 percent contraction in the size of the economy, comparable to the shock of the 2008 recession, the report found. The stock market would also fall by an estimated 45 percent.

If anything, they’re underselling it. As I explained in January, the United States Dollar is the default currency for the world. It’s the bedrock of the global economy. When our economy tanks, we take everyone else with us. And that’s under normal circumstances.

Should the Dollar become unreliable for the first time in history, there is no scenario in which overseas markets do not suffer massive shocks. Those shocks would, inevitably, rebound back onto us, making our economic situation even worse, causing a vicious feedback loop. The resulting recession would be the most extreme in a century and might tip over into a full-blown depression.

Normally, when we are in a recession, the federal government becomes the “spender of last resort.” That means the government puts money into the system to get things started again. Reagan did it. Both Bush Sr., Jr, and Clinton did it. Republicans tried to stop Obama from doing it and dragged out the recovery from the Great Recession by years as a result. Trump did it, too, and Republicans were happy to spend that money to help boost their doomed chances of being reelected. The federal government can always step in when things get bad.

But in order to be the spender of last resort, you have to have money to spend and if Republicans refuse to lift the debt ceiling, there won’t be any. Just as bad, once the debt ceiling is breached, even for a minute (literally a minute), the Dollar will no longer be considered “safe” by other countries. Our borrowing costs will skyrocket because you do not lend money to a risky borrower without demanding higher interest. That’s bad business. Even worse, lenders will start to look for alternatives because if the Dollar is no longer perfectly secure, why not try other currencies?

If the Dollar ceases to be the world’s default currency, we will long for the good ol’ days of the Great Recession. If you’re an insurrectionist Republican hoping to tear down the United States government, this is exactly what you want. For the other 330+ million of us? Not so great.       

Look around you. Look on social media. Does it appear that people understand how serious this is? Imagine knowing several months in advance that the 2008-2009 collapse was coming. What would you have done differently? We are staring down the barrel of that very scenario again, but worse, in less than 4 weeks. How many people do you know are talking about it? Preparing for it? Even acknowledging it?

Will House Republicans really do it?

It is possible Republicans will back down but, unfortunately for all of us, they have every incentive to nuke everything. Trump is a loser candidate and unless the economy is radioactive slag, Republicans are going to be destroyed in next year's election. The only thing that will keep them from doing this is the fear that they will be blamed for the millions of jobs lost and lives destroyed. Thanks, however, to the heroic efforts of the press to spread the blame to everyone, Republicans have the green light to push the shiny red button and let that mushroom cloud loose.

Even if they fail to retake the White House in the smoldering aftermath, it might help them retake the Senate and stop the flow of Democratically-appointed judges that threaten to upend their decades-long plan of utterly corrupting the judiciary. Eight years of unimpeded Biden appointees is a danger worth setting the global economy on fire for. 

It’s possible that Biden and the Democrats will, like Obama once did, agree to a limited set of ransom demands. In 2011, both parties agreed to cuts that neither side wanted. This compromise was so loathed by everyone in Washington that they eventually rolled back almost all of the cuts. Not just the ones Republicans hated, either. 

That was 2011, the height of the Tea Party. Today’s Republican Party is not nearly as reasonable as the party of “Second Amendment remedies” so it seems unlikely they’ll agree to any significant cuts to Republican priorities at all. Why should they? The goal here is to either destroy Biden’s entire domestic agenda or the American economy. Preferably both at the same time. 

Frankly, I’m of the opinion that even if Democrats give Republicans what they want, McCarthy, under the control of the Insurrectionist Caucus, will simply keep adding demands until they find something Democrats cannot agree to or they run out the clock. They may agree to a few stopgap measures and delay the breach for a few weeks or a month or two, but, eventually, that shiny red button is going to get pushed. The press, naturally, will be too confused by all this complex negotiating to report that Republicans deliberately blew it. Oh, if only both sides could have worked together!

There’s also the very real possibility that Republicans will be too incompetent to take “Yes” for an answer. House Republicans are only ever united in saying “No” to Democrats. When it comes to their own priorities, they are too busy lining their own pockets and working on the next grift to actually get any work done. There are rational Republican economists (they exist? Who knew?) who are screaming at the top of their lungs that breaching the debt ceiling is insane. But they are losing to rabid ideologues who say everything will be just fine. Here’s what that looks like in reality:

Kevin Mccarthy is playing chicken with the global economy and dozens of other people, none of whom care about anyone but themselves, are all pulling on the steering wheel. This is a recipe for disaster with the very small amount of time we have left.

Can we stop them?

Yes. Yes, we goddamn can. We just have to have the cajones to do it. Right now, House Democrats are working on a discharge petition which is obscure, difficult, and a major plot point in Legally Blonde 2 (no, I am not making that up). This petition will allow Democrats, with the help of a very small number of Republicans who do not want to set the world on fire, to bypass House Republican leadership and bring a debt ceiling bill to the floor. If McCarty is intent on pushing the red button, we have to hope that the Republicans love their children, too.

If that doesn’t work in time, President Joe Biden can, and absolutely fucking should, say, “Fuck you. Section Four of the 14th Amendment of The United States fucking Constitution clearly states that ‘the validity of the public debt of the United States, authorized by law…shall not be questioned.’ The debt ceiling is unconstitutional. I am ordering the Treasury to continue to pay our debts because the United States does not shirk its obligations. See you in court, assholes” The White House has, in fact, been talking about it.

Republicans will howl. Fox News will explode in 24-hour rage. Twitter will be overrun with Russian bots screaming that Joe Biden is a lawless tyrant. Lawsuits will be filed and all of them will be rejected.

That last bit is important. In the United States, you cannot sue unless you have standing, meaning you are affected directly by the case. If Joe Biden kicks Kevin McCarthy in the shin, I can’t sue because I am not directly, or even indirectly, affected. I have no standing. The executive branch essentially seizing control of the purse strings from the legislative branch to continue paying the bills would mean only the House could sue. Not the Federalist Society. Not the NRA. Not even the Senate. The House, and only the House, would have standing because money is their prerogative.

They might do it, but that would mean House Republicans would have to take full ownership of the damage if they won (and that’s a big “if”). They would be solely responsible for derailing the world’s economy and everyone would know it. The muddied waters they are currently hiding in would be gone. This defeats the entire purpose of blowing everything up in the first place. They still might do it out of spite but this would happen sometime in 2024, during an election year, and all but guarantee their utter destruction at the ballot box. 

That’s assuming the Supreme Court, where this would inevitably land, would rule in favor of the GOP. While the real fanatics like Thomas and Alito would happily ignore their embrace of the unilateral executive theory to stick it to a Democratic president, there’s a very real chance the other Republican Justices would not. It’s very possible they would be less than eager to trigger a global economic disaster based on pure ideology and thus cement the Court’s reputation as a partisan tool of the Republican Party.

Michael Cohen (not that Michael Cohen) of MSNBC argues that SCOTUS might happily take the chance to prove their “rule of law” bonafides after the pummeling they’ve taken the last year. Republicans would come out ahead as well since they could fundraise on Biden being a lawless monster oppressing the American people by…paying America’s bills? Whatever, all of their fundraising pitches are mindless gibberish anyway. Republicans will rake in boatloads of cash from morons too stupid to understand Joe Biden saved their asses from their own political party.

Biden, however, would benefit most of all. Not only would he have taken the nuclear bomb out of the hands of House Republicans forever, but he would also have shown the Democratic base that he can play hardball unlike any Democratic president in our lifetime. The people who are always screaming “Do something!” will immediately scream “Do more!” but the rest of us? The rest of us will be posting Dark Brandon memes until Biden cruises to victory on election day.

But none of this guarantees that Biden and the Democrats will do this or that they will be successful if they try. There’s a reason I have 3 months’ worth of food stockpiled in my pantry and deep freezer and have spent the last several months saving up over $5000 for rent and utilities. I wake up every morning hoping that I’m wrong. That I spent all of this time and effort for nothing. But you know the saying: Hope for the best, plan for the worst. 

Unless you were around for the Great Depression, breaching the debt ceiling will be the worst economic crisis of your lifetime. And it’s coming in less than a month. If you’ve been ignoring it until now, it’s really time to start paying attention.

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