The Debt Ceiling: House Republicans Hold the World's Economy Hostage

by Mark Gabrish Conlan • Copyright © 2023 by Mark Gabrish Conlan for Zenger’s Newsmagazine • All rights reserved

On April 17, 2023, Kevin McCarthy, Speaker of the Republican-controlled House of Representatives, served notice on the American people of just what he and his House Republican colleagues will demand in exchange for raising America’s debt ceiling. Until 1994, when the Republicans gained their first House majority in 40 years, raising the debt ceiling as needed was a strictly mechanical exercise. Most people didn’t know the debt ceiling – a resolution the U.S. obliges itself to extend periodically to pay for money it’s already spent – even existed. But over the last 30 years, whenever Republicans have held control of one or both houses of Congress while the President was a Democrat, it’s become a highly controversial and contentious issue.

Contrary to popular misconceptions, raising the debt ceiling does not put the U.S. further into debt. It merely gives the U.S. Treasury Department permission to pay the bills for debt we’ve already incurred. Not raising the debt ceiling would be like you unilaterally deciding you aren’t going to pay your credit-card bills. Banks and other financial institutions don’t take kindly to that sort of thing, and neither would the U.S.’s creditors. (In most discussions about the national debt very few people mention whom and what we owe the debt to, but it’s basic economics that every time there is a debtor, there is a creditor.)

The U.S. is in a particularly powerful position to sink the world’s economy if it decides to stop paying its bills, because the U.S. dollar is the world’s reserve currency. That means that anything which causes creditors and other nations to doubt the soundness of the U.S. dollar will hurt the world’s economy more than it would if the European Union, Britain, Japan or another country did it. But the United States and the world economy are both being held hostage by a group of about 20 or so radical-Right Republicans with deep Libertarian ideological roots who are threatening to refuse to raise the debt ceiling unless the Democrats who still control the Presidency and the Senate agree to deep cuts in domestic spending.

Not that there’s a lot of room to cut the federal budget, particularly in the major ways the Republican Right wants to. Given the posture of both major parties towards the U.S. military – even though, according to the Peter G. Peterson Foundation, a conservative group of deficit hawks, the U.S. spends 40 percent of the total world’s defense budget, more than that of the next 10 nations combined (https://www.pgpf.org/blog/2023/04/the-united-states-spends-more-on-defense-than-the-next-10-countries-combined#:~:text=April%2024%2C%202023-,The%20United%20States%20Spends%20More%20on%20Defense%20than%20the%20Next,Peace%20Research%20Institute%20(SIPRI).) – America’s bloated defense budget is off limits. And, despite the long-standing desire of many Congressional Republicans either drastically to cut Social Security and Medicare or eliminate them altogether, President Joe Biden artfully tricked them during last February’s State of the Union address into a public pledge to keep those programs intact, at least for now.

So, with the three biggest expenditures the U.S. government has off the table, Republicans are wracking their little pea-brains looking for other things to cut. Among their suggestions are cutting the administrative budgets for Social Security and Medicare, as well as the Internal Revenue Service – even though the 2023 tax season went far smoother than usual because President Biden and a Democratic Congress raised the number of IRS agents, thereby cutting wait times on the phone from half an hour to five minutes. The non-partisan Congressional Budget Office (CBO) has warned that defunding the IRS would actually increase the budget deficit, because it would enable more people who underpay their taxes, accidentally or deliberately, to get away with it.

The Republican plan to raise the debt ceiling – which McCarthy grandly calls the “Limit, Save, Grow Act of 2023” (H.R. 2811) – aims to roll back discretionary government spending to 2022 levels. It would prevent President Biden from rolling back student loan debt (an executive order currently tied up in court after a number of Republican state attorneys general filed suit to stop it) and it would impose work requirements on recipients of food stamps, Medicaid and the so-called “Temporary Assistance to Needy Families” (TANF) program enacted by Democratic President Bill Clinton and a Republican Congress in 1996.

It would also repeal most of the Inflation Reduction Act (IRA) passed last year by President Biden and a Democratic Congress, and would specifically eliminate unspent COVID-19 relief funds and anything to do with fighting human-caused climate change. And it would vastly restrict the administration’s ability to block oil drilling or coal mining on federal lands. What’s more, the debt ceiling extension would last for only one year – so the two major parties would have to fight this out all over again just as the 2024 Presidential election campaign, for which Biden has already announced his candidacy for re-election, is heating up.

Too “Draconian” – Or Not Draconian Enough?

President Biden and other Democrats have, predictably, already denounced H.,R. 2811 and its precursor, a budget plan introduced in March 2023 by the ultra-Right House Freedom Caucus. In a statement released on March 20 (https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/20/five-alarm-fire-the-house-freedom-caucus-extreme-budget-proposal-endangers-public-safety/), the White House called the Republican budget plan a ‘FIVE-ALARM FIRE” (in all caps). They said it would slash public safety programs and make life worse for working-class and middle-class poeple while funding big tax breaks for the rich. “In fact, their tax cuts would be so expensive that their deep and harmful cuts would not reduce the deficit,” the White House’s “FIVE-ALARM FIRE” statement said.. White House officials have called the Republican budget proposals “draconian” and have argued that in order to meet the Republicans’ goals to reduce federal spending without cutting the military, Social Security or Medicare, they would have to get rid of the entire rest of the federal budget.

But while Biden and the Democrats are calling the GOP budget planks “draconian,” Kevin McCarthy is having problems from Congressmembers of his own party who don’t think they’re draconian enough. In a frightening dispatch released by Reuters April 18 (https://www.axios.com/2023/04/18/republicans-mccarthy-debt-ceiling-deal), various Republican House members questioned McCarthy’s plan and called for more extreme measures. One unnamed Republican Congressmember told Reuters reporters Andrew Solender and Juliegrace Brufke that the threat of a national default was “the single biggest point of leverage that will exist in these two years."

Other Republican House members were willing to allow the Reuters reporters to use their names, but said things equally outrageous. “I think that they should go further. ... I am in favor of very aggressive cuts," said Right-wing Rep. Anna Paulina Luna (R-FL).

Rep. Andy Biggs (R-AZ), who unsuccessfully challenged McCarthy in the election for Speaker, said McCarthy's proposal to keep non-discretionary,, non-defense spending at 2022 levels is a "long ways away" from what he wants, which is to bring it down to 2020 levels before the COVID-19 pandemic. "I’m not at the table,” Biggs told Reuters. “And I get it, McCarthy’s pissed that I ran against him, so I don’t get invited to any of these deals. But I think it’s unfortunate that he doesn’t want to hear from everybody.”

House Republicans like Reps. Tim Burchett (R-TN) and Eric Burlison (R-MO) are skeptical of raising the debt ceiling on principle. "I just didn't run for Congress to raise the debt ceiling," Burlison told Reuters..”It’s not something I’m excited about. … I really want to see some real restraints and fiscal cuts, not just promises.”

President Biden met with McCarthy one time in February but since then has refused to negotiate with the Republican House leader. Biden’s position is that the House should do its job and pass a “clean” bill to lift the debt ceiling, without any preconditions, and then negotiate spending issues later as part of the normal budget process. But McCarthy has already declared that a non-starter. In his April 17 speech before the New York Stock Exchange – a significant locale because it’s the business home of the investors and financiers who would be among the biggest losers if the U.S. actually defaults on its debts – he said, “A no-strings-attached debt limit increase will not pass.”

What Are the Republicans After?

Ask most Republican politicians, especially those on the far Right of their party, what book has most influenced their political outlooks and beliefs, and they will generally tell you the Bible. Ask them what book besides the Bible has most influenced them, and most will say the 1957 novel Atlas Shrugged by Ayn Rand. Atlas Shrugged is a long book with an apocalyptic plot line in which the world’s biggest and most powerful capitalists withdraw from the global economy and form a secret state of their own. Without them, the world’s economy collapses and their leader, John Galt, serves notice on the population, “If you want an industrial society, you will have to have it on our terms.”

The last time Republicans in Congress threatened to force the U.S. to default on its debts, I wrote that they basically seemed to be trying to replicate the ending of Atlas Shrugged in real life. Rand’s immensely popular novel gave rise to Libertarianism, a political philosophy that holds that there are only three proper functions of government: a military, to protect the nation and its property owners from foreign threats; law enforcement, to protect people with property from the attempts of people without it to take it; and a court system, to adjudicate disputes between people with property as well as to punish criminals, who in Libertarian ideology are defined as anyone who relies in whole or in part on government for their survival.

It’s not clear just how many of the radical-Right House Republicans are hard-core Libertarian ideologues who hope that their refusal to raise the U.S. debt ceiling will bring about a global economic apocalypse and therefore end all those pesky social programs they don’t believe should exist. It’s not even clear that most of them have thought out the consequences of the U.S. failing to pay off its debts at all. But we’ve seen far-Right Congressmembers like Marlorie Taylor Greene of Georgia and Lauren Boebert of Colorado repeat over and over, like meditation students clinging to their mantras, that as Boebert told Fox News host Sean Hannity during the epic struggle over Kevin McCarthy’s effort to become Speaker of the House, “We’ve got to stop spending money we don’t have,” with a ferocity and grim determination that even put off a sympathetic interviewer like Hannity.

How We Got Here: The Failure of the “Red Tsunami”

One reason we are facing the potential of a worldwide economic crisis is that, contrary to the predictions of virtually every U.S. political analyst (including me), the widely expected “Red Tsunami” – a pro-Republican avalanche of such devastating proportions the Democrats would barely be left with a foothold in Congress – didn’t happen. The Democrats actually picked up a seat in the U.S. Senate and lost their House majority by only six seats. In a country whose political system was more rational than ours, that might have led both major parties to move to the center and avoid potentially world-shattering economic cataclysms.

Unfortunately, the United States has neither a parliamentary system, proportional representation nor any of the other fail-safe mechanisms other countries have. The combination of single-member legislative districts, the two-party duopoly that creates, and the House of Representatives’ tradition of absolute majority control ensures that the safety valves electorates have in most of the world’s democracies don’t exist here. Once the people have voted a party in, they don’t have any recourse for at least the next two years. Even the recall, a highly controversial process by which voters in certain U.S. states to get rid of a public official and replace them with someone at least theoretically better able to represent them, doesn’t exist at the federal level.

This has led to the absurd spectacle of George Santos, one of the four New York Republicans who unseated Democrats in key upstate districts President Joe Biden had easily won in 2020, clinging to office even as the web of lies he told about himself has unraveled completely. There’s something weird and pathetic about the spectacle of Santos essentially giving the finger to the growing number of people – including the Republican party leaders of Nassau County, where he’s from – who want him to resign. As long as Kevin McCarthy needs Santos’s vote – which he does – McCarthy will protect him and there won’t be any way the people in Santos’s district can get rid of him until 2024.

One grim irony of the Democrats doing so much better than they were expected to in the 2022 midterm elections is the small size of McCarthy’s majority actually gave the farthest-Right crazies in his party more power. Though the Constitution specifies that the House Speaker is elected by the entire membership, in practice the majority party selects the Speaker without any input from the minority. In normal Speaker elections the majority party caucuses behind closed doors and selects the new Speaker privately before taking the floor and electing them in public. Not this time: for the first time in exactly 100 years this year’s Speaker election went past a single ballot. In fact, it took 15 ballots before Kevin McCarthy got the votes he needed – and he only got them because a few bitter-enders like Boebert agreed to vote “present” on the last ballot and thereby reduced the number of votes McCarthy needed to 215 – three votes short of an actual majority.

In exchange for the votes he needed to become Speaker, McCarthy had basically to subcontract the entire governance of the U.S. to the far-Right crazies in his party. Among the more bizarre things he needed to give in on was the so-called “motion to vacate,” which as CNN reported on December 13, 2022 – less than a month before McCarthy’s election after four harrowing days and 15 ballots (https://www.cnn.com/2022/12/13/politics/house-speaker-gop-motion-to-vacate/index.html) – means that just one House Republican (or Democrat) can move at any time to remove him from the job. McCarthy is undoubtedly well aware that even without the “motion to vacate” rule in place, the last House Speaker who negotiated a deal with the Democrats over raising the debt ceiling, John Boehner, was driven from office by Right-wing Freedom Caucus members who hadn’t thought his deal did enough to bring down government spending.

As Representative Dan Crenshaw (R-TX) told CNN last December, “There’s a reason [the motion to vacate] already got debated. You can’t govern with a gun to your head, and that is what they are asking for. It makes us highly unstable, and it lays out the potential too for Democrats to take advantage of this and create absolute chaos.” Advocates for the ”motion to vacate” compared it to the ability of a corporate board of directors to fire a chief executive officer (CEO) – but CEO’s generally have contractual protections. A corporate board that wants to fire a CEO before their contract is up generally has to spend millions of dollars to buy them out. The “motion to vacate” carries with it no comparable penalties.

The radical Right of the Republican House Caucus got far more out of McCarthy than just the “motion to vacate.” They got seats on hugely important House committees. Marjorie Taylor Greene, who had been removed from all committee assignments in the last Democratically-controlled House for physically threatening other members and calling for the execution of certain prominent Democrats, now serves on the Homeland Security Committee. Paul Gosar (R-AZ), who’s so demented virtually his entire family endorsed against him when he first ran for Congress in 2020, was put back on the Natural Resources Committee.

Since I wrote the first draft of this article last January, the dimensions of the deal McCarthy cut with the craziest members of the House Republican Caucus to become Speaker have become even more apparent. McCarthy not only appointed Jim Jordan (R-OH) chair of the House Judiciary Committee, he gave Jordan a subcommittee to investigate the so-called “weaponization” of the federal government against Republicans and conservatives in general, and former President Donald Trump in particular. Jordan organized a rare “field trip” of the House Judiciary Committee to New York City, ostensibly to investigate the rising crime rate (which is actually declining; one MS-NBC host noted that there are five cities in Jordan’s home state of Ohio, including Mansfield in his own district, which have higher murder rates per capita than New York) but really to embarrass Manhattan District Attorney Alvin Bragg for having sought and received an indictment against Trump.

McCarthy also unilaterally gave thousands of hours of House surveillance footage of the January 6, 2021 attack on the U.S. Capitol to then-Fox News prime time host Tucker Carlson – much to the disgust of the U.S. Capitol Police, who worried the airing of such footage would reveal the plans they have to evacuate Congressmembers and their staffs in case there’s another attack on the Capitol. McCarthy’s apparent intention in giving this footage to Carlson was so Carlson would produce a series of videos claiming that the January 6, 2021 riot was no big deal – but Carlson’s tenure at Fox ended ignominiously on April 24 after he’d done just one five-minute segment based on this footage.

Ultimately, Biden Will Have to Cave

In refusing so far to negotiate with Kevin McCarthy and the House Republicans – including the ultra-Right crazies he depends on to keep him in power – President Biden has morality and principle on his side. Biden has said it is the responsibility of Congress to raise the debt ceiling periodically as necessitated by the amount of federal spending they have already approved in the budget. He has argued passionately that it’s irresponsible for either major party to hold the U.S. and world economies hostage for a few transitory political gains. And he’s right about the probable outcomes of the deep budget cuts the Republicans want – worse times for ordinary Americans, huge tax breaks for the already super-rich, fewer resources to ensure public safety, and an accelerating global environmental crisis that within 100 to 200 years is likely to make Earth uninhabitable for humans.

But as the late, great trial lawyer Louis Nizer once wrote, “When a theory collides with a fact, the result is a disaster.” Biden has the theory on his side, but McCarthy has the facts. With the House firmly under Republican control – albeit by a slender majority – the simple fact is that no extension of the federal debt ceiling can pass the House without McCarthy’s approval. As Speaker, McCarthy controls the House’s agenda, and he has the power to prevent a “clean” debt-ceiling bill from ever going through simply by refusing to allow it to be voted on.

The only way around McCarthy’s ironclad control of the House’s agenda is something called a “discharge petition,” in which a majority of House members request a chance to vote on something the Speaker has decided not to let them vote on. But that is a lot easier said than done. MS-NBC host Lawrence O’Donnell, who worked for years on the staff of Senator Daniel Patrick Moynihan (D-New York) and therefore knows a lot about the arcana of legislative rules, obtained a copy of the House rules for a discharge petition and said he couldn’t make heads or tails of them.

Previous fights over the debt ceiling have ended at least partly because the major Republican donors – the ultra-rich people who would stand to lose the most if the U.S. actually defaulted – have threatened to stop donating campaign money to the party or its members if they jeopardized the U.S.’s credit rating. But this may not be as effective as it once was. For one thing, a lot of big Republican donors have themselves drunk Ayn Rand’s Libertarian Kool-Aid and are looking forward to a sort of Atlas Shrugged apocalypse. They aren’t worried about losing their own money because Rand in her novels frequently had her super-capitalist heroes lose all their money – only to gain it all back, and more, because they were just so overwhelmingly superior to the rest of humanity.

Besides, ever since Donald Trump emerged as the Republican favorite for the 2016 Presidential nomination, modern-day Republicans have made a fetish out of attacking so-called “corporate elites” and proclaiming themselves as champions of “the little guy” against anonymous, faceless corporate bureaucracies. Ever since the modern-day political alignment emerged between 1968 and 1980, the Republican Party has been an uneasy but surprisingly durable coalition between Libertarian capitalists who want government to keep out of their own business, and hyper-Right Christian activists who want a huge, interventionist government that actively decides for people whom they can have sex with, how they can deal with the consequences – good and bad – therefrom, what books they may read and whether they can travel.

For most of the last 62 years the Libertarian Right had had the upper hand in this coalition. Not anymore. Florida Governor Ron DeSantis’s holy war against his state’s largest private employer, the Walt Disney Corporation, over their opposition to his “Don’t Say Gay” bill (driven by Queer and Queer-friendly Disney employees who pressured the company to take a stand on the legislation) essentially signaled to the American capitalist elite that they’ve created a monster. Governments in Florida and other Republican-controlled states are moving aggressively to limit the freedom of employers as well as individual employees to live their lives as they want to – and the same Republican true believers who want an intrusive Big Government policing people’s private sex lives may not stop at bringing down the world’s economy just because a few corporate fat-cats tell them not to.

So ultimately Biden will cave. He will have to. Maybe he’ll win some tweaks in the GOP’s economic proposals that will somewhat soften the blows. But he knows that ultimately he will have to agree to a Republican budget plan that will eviscerate many of the policies and programs he wanted to be President to create or protect in the first place. The other possibility is that, despite the public statements of both Biden and McCarthy that neither wants to see the U.S. default on its obligations, it may happen anyway. The classic example in history of a destructive event no one really wanted is World War I; the countries that blundered their way into this war either thought it would never happen or expected a quick victory for one side or the other. Instead the war hideously dragged on for over four years and left wanton carnage in its wake.

Besides, if the U,S. actually defaults on its debts and sends the global economy crashing, U.S. voters will take it out on Biden and the Democrats. That’s what they did in 1932, when Republican President Herbert Hoover was almost universally blamed for the 1929 stock market crash and the ensuing Great Depression because they occurred on his watch. Even though he had little to do with it – and Hoover actually began the Reconstruction Finance Corporation (RFC) and some of the other big-government programs his successor, Franklin Roosevelt, got credit for – the homeless encampments of the 1930’s were bitterly nicknamed “Hoovervilles.” The result of the economic collapse of the 1930’s was a long period of Democratic control of the country – and the likely result of an economic collapse under Biden’s watch would be a similarly extended period of total dominance by Republicans.