A Minus and Plus for the Debt Ceiling Crisis
The debt ceiling discussions in Washington may well be help President Biden’s secret domestic agenda but it is hampering on of his foreign policy aims.
The New York Times economy columnist Paul Krugman is aghast that the Biden administration had not prepared for the obvious showdown with the Republicans:
As soon as Republicans took control of the House last November, it was obvious that they would try to take the economy hostage by refusing to raise the federal debt limit. After all, that’s what they did in 2011 — and hard as it may be to believe, the Tea Party Republicans were sober and sane compared to the MAGA crew. So it was also obvious that the Biden administration needed a strategy to head off the looming crisis. More and more, however, it looks as if there never was a strategy beyond wishful thinking.
[R]ight now I have a sick feeling about all of this. What were they thinking? How can they have been caught so off-guard by something that everyone who’s paying attention saw coming?
I am amused over this. Krugman seems to have believed Biden’s election campaign talk about being ‘progressive’ or on the ‘left’. Joe Biden was and is far from that. I for one would characterize him as a centrist with strong leanings towards the right.
The fight over the debt ceiling is arbitrary but a chance for Republicans to threaten some damage. The fear is then used to push for domestic policy concessions:
For those somehow new to this, the United States has a weird and dysfunctional system in which Congress enacts legislation that determines federal spending and revenue, but then, if this legislation leads to a budget deficit, must vote a second time to authorize borrowing to cover the deficit. If even one house of Congress refuses to raise the debt limit, the U.S. government will go into default, with possibly catastrophic financial and economic effects.
This weird aspect of budgeting allows a party that is sufficiently ruthless, sufficiently indifferent to the havoc it might wreak, to attempt to impose through extortion policies it would never be able to enact through the normal legislative process.
I do not for one moment believe that Biden is unhappy about that.
In the 1990s and early 2000s Biden supported bankruptcy reform that made it more difficult, especially for the poor, to get rid of debt:
[Biden] had pushed for two earlier bankruptcy reform bills in 2000 and 2001, both of which failed. But in 2005, BAPCPA made it through, successfully erecting all kinds of roadblocks for Americans struggling with debt, and doing so just before the financial crisis of 2008. Since BAPCPA passed, Chapter 13 filings went from representing just 24 percent of all bankruptcy filings per year to 39 percent in 2017.
Before that Biden had called for cuts to Social Security:
In 1984 he proposed freezing Soci
Article from LewRockwell