When the extraordinary becomes the ordinary, you know that either something’s gone wrong somewhere, or you’re dealing with the U.S. government. Perhaps that’s not so either/or, now that I think about it.
CNS News has an interesting report on the latest “Daily Treasury Statement”: The national debt has been officially stuck just a few bucks (relatively speaking) shy of the debt ceiling . . . for the past 56 days!
Well, by “the standard set of extraordinary measures,” of course! Gosh, you didn’t know that?
It’s always nice to have an admission from the government that extraordinary measures have actually become somewhat routine. Nothing to see here. Move along. No need to panic, at least not until we get to the extraordinary set of extraordinary measures.
Well, according to Treasury Secretary Jacob Lew, that moment will probably arrive sometime after Labor Day. CNSN comments:
If that prediction is correct, it will mean that the Daily Treasury Statement will continue to peg the “debt subject to limit” of the United States at exactly $16,699,396,000,000.00—or just $25 million below the legal limit—for another month and a half.
If the Treasury then says, sometime in September, that it can no longer hold the debt subject to limit at exactly $16,699,396,000,000.00 but must default on the bills of the federal government if the Republican-controlled House of Representatives does not vote to increase the legal debt limit, the Treasury will then be forcing a battle with the Republican House over the debt limit at the same time that the current continuing resolution, which funds the government until Sept. 30, is set to expire.
This is why, in his letter, Lew chides John Boehner and the Republican leadership, in classic big-Treasury style:
The global economic leadership position enjoyed by the United States rests on the confidence of Americans and people around the world that we are a nation that keeps its promises and pays all of its bills, in full and on time. Breaching that trust would do irreparable harm to the economy and the American public. . . . It must be understood that the creditworthiness of the United States is an essential underpinning of our strength as a nation.
Alexander Hamilton could not have said it better himself. But it’s all blunder to protect the political priorities of big government. Lew makes this clear when he adds, “I want to reemphasize what the President has said repeatedly regarding any threats to cause default in order to extract policy concessions from the Administration: We will not negotiate over the debt limit.” He criticized the House’s attempt at “so-called prioritization” of payments imposed upon the administration without raising the debt ceiling.
So, who’s going to blink first? The broke administration whose credit cards are maxed out, or the Republican-captive Congress that touts fiscal responsibility but has its finger on the button to raise the limit on those cards?
Well, the House already did, actually.
That “Prioritization Bill” appears to be a bare four page Act that would require the government, in the event that the debt ceiling is reached, to give first priority of payment to paying down its debt and to social security obligations. According to Lew, such a policy is “unwise, unworkable, unacceptably risky, and would harm the full faith and credit of the nation.”
But despite Lew’s opposition, and widespread Republican support in the House, it appears the bill may actually be a liberal government’s version of an unlimited EBT card—i.e. a blank check from Congress. Thomas Massie, one of the few Republicans to vote against the bill, called the final amended version a “stealth debt limit increase.”
Justin Amash, who originally co-sponsored the bill, voted against it once the Republican leadership gutted it and transformed it into the Trojan horse that it is. He explained what happened:
I voted no on H R 807, Full Faith and Credit Act, which effectively raises the debt ceiling by exempting certain items from its calculation. I cosponsored the original text of this bill, which required the Department of the Treasury, in the event we reached the statutory debt limit, to simply prioritize its spending and use daily revenues to pay the principal and interest due on the national debt. This type of prioritization is appropriate and would prevent a sovereign default.
The Committee on Ways and Means decided to strip out this language and replace it with a partial debt ceiling elimination bill. Under the amended bill, when the debt limit is reached, the Treasury *must* continue borrowing and increasing the national debt to pay debt service and Social Security, even though revenues are more than enough to cover these items. And this borrowing—more than $300 billion in 2013 and over $800 billion (estimated) by 2021—would be *exempt* from the debt limit. In short, this bill eliminates the debt ceiling with respect to two large (and growing) areas of the budget, and it’s the first step toward eliminating the entire debt ceiling—the most important structural restraint we have on government borrowing.
According to that Committee’s report (p. 5), the man behind at least part of this change was none other than the allegedly fiscally conservative Mr. Paul Ryan.
This fact was apparently lost on the rest of the fiscally conservative Republicans, for the vast majority voted for the bill (I see only seven exceptions). The bill passed the House and is now sitting in Committee under Harry Reid’s watchful eye.
Interestingly, John Boehner’s name is conspicuously absent from that roll call vote altogether. He’s not even registered as “not voting.” Where was he?
But even this compromised bill appears to involve too much discipline for the left. I assume it will only languish in committee in the Senate, which certainly has no incentive to take any potential fall at this point.
So what do we have? We have an administration that will not budge on rabid spending, a House that can pretend it has already addressed the situation, and a Senate that can stand at arm’s length from both and pretend the ball is not in their court.
Expect to hear discussion in the news regarding that old debt ceiling again. This will start probably the week before Labor Day, possibly earlier. The “the standard set of extraordinary measures” will begin to run dry, and that’s when the dirty little secret of the Treasury will begin to impinge upon Treasury’s beneficiaries, Congress.
That’s right, according to Lew’s appendix, the “the standard set of extraordinary measures” includes jeopardizing future payments from Federal retirement program funds. But these “measures” automatically assume that “After the debt limit impasse has ended” these compromised funds will be “made whole.” But what happens if the debt limit impasse does not end? Eek! That would mean “Once the extraordinary measures have been exhausted, however, the U.S. government will be limited in its ability to make payments across the government” . . . indefinitely!
That, then, is the extraordinary set of extraordinary measures: defaults. And that means pain for all Congressmen and Senators who are not hard-core tea party fiscal conservatives, or whose constituencies would not support one in a primary contest.
I would assume we can expect the Boehner-Ryan-Republican establishment machine to sell out with some kind of bill in the name of national security and the Full Faith and Credit of the U.S., and likely in the name of fiscal responsibility. And the spending, like Boehner’s recent farm bill monstrosity, will continue.
As usual, for lack of fortitude and principle, the Right will continue to be the Great Enabler of the Left. And Hamilton won’t even have to roll over in his grave.