The 2023 Budget Fight As An Ongoing War

Well, I just wrote a few days ago about how the current Republican Congressional push to force a debt ceiling default just to make Biden's re-election hopes go up in smoke, but somehow during this weekend Biden was able to get Speaker McCarthy to sign off on a budget deal. Some details via Claudia Grisales, Ximena Bustillo, Franco Ordoñez, and Joe Hernandez at NPR:

President Biden and House Speaker Kevin McCarthy reached an agreement in principle to avoid a potentially disastrous government default and raise the nation's debt ceiling. But as details – and criticism – of the deal began to trickle out on Sunday, both sides moved to rally support for a plan that negotiators concede will not please everyone...

The deal follows weeks of negotiations and a tense creep toward a deadline to raise the government's borrowing limit. The final package is expected to have opponents on the extremes of both parties, but the announcement Saturday indicates that Republican and Democratic leaders believe they will gain enough bipartisan support to pass the legislation. That confidence will be tested over the next few days as the measure makes its way through the House, where Republicans hold a slim majority.

The proposal holds nondefense spending for fiscal year 2024 at roughly current levels and raises it 1% in 2025, according to a source familiar with the negotiations. The agreement separately raises the debt limit for two years.

Overall, it's something that sticks to the current fiscal path that the federal government was on. There doesn't seem to be a lot of deep cuts to social aid, the restrictions Republicans are getting on food stamps may not create massive consequences (the work requirements are going to be affecting people who are already working). This deal can be considered a win for Biden since it kicks any further debt ceiling fight past the 2024 elections (providing of course Biden wins re-election and the Dems can at least retain partial control of Congress) and because it plays up to the national media's expectations of "bipartisan" deals getting done.

Thing is, the fight isn't over. Digby at her website has more on that:

It’s not over yet, because Kevin McCarthy still has to round up enough votes to get past the Hastert Rule (GOP can’t bring a bill to floor with a majority of Democratic votes) and he might still face a motion to vacate the chair when all is said and done (which is his problem, not ours) it appears that creaky old Joe got the best deal we could have expected, most importantly an agreement to extend the debt limit until after the next election...

Digby quotes from Dave Dayen at the American Prospect:

With one potentially major exception, the relative harm and help was kept to a minimum in the final agreement. It will only be a little bit easier to commit wage theft, or to sell defective or poisoned products. It’ll only be a little harder to get rental assistance or tuition support. Only a few people will be freer to pollute the environment; only a few will find it more difficult to get food. The Internal Revenue Service will only be a little worse. A lot of things will stay the same. Almost nothing will get any better...

The goal here was to allow both sides to say contradictory things to their members. Republicans can say they achieved the target of the Limit, Save, Grow Act to limit discretionary spending to FY2022; Democrats can say they only froze spending at current levels. And both are sort of right.

Digby then cites Dan Pfeiffer over at Message Box News (what the hell is that? nevermind, keep reading):

I want to hold out judgment on the work requirements until I see the details, but based on what we know, Biden limited the damage demanded by the GOP.

There’s not much to love in this deal for progressives, but Biden seems to have preserved all of the climate funding from the Inflation Reduction Act. If that’s the case, it’s a big win.

The deal is not great, but it’s a far cry from what the Republicans wanted. Notably, the Republicans played their best card, and all they got was a suboptimal budget deal...

Joe Biden played a very tough hand well. He got a better deal than many thought possible, and he forced the Republicans to adopt a series of very unpopular positions that they will have to own on the campaign trail next year. 

There is nothing inspirational about “could’ve been much worse.” No one will run to the polls or volunteer to make phone calls because Democrats “limited the damage.” But the debt limit was President Biden’s first showdown with the MAGA Republican House. All things considered, he navigated it quite well.

Again, Biden got the best of this - and will still likely get hammered by Beltway Media for some reason or another to keep their "horserace for 2024" narratives going - while McCarthy has to face his own House factions and keep them from turning on him or each other.

I mentioned it before: There is that Freedom Caucus faction that came into this budget fight wishing for a government default who are going to be livid that the debt ceiling will be addressed with this deal. These are the congresscritters who WANT to drive the nation over that cliff, and if McCarthy is putting the brakes on that act of destruction that caucus is going to lash back.

As Digby pointed out, the current House rules are that the "majority of the majority" (that Hastert Rule) requires that enough Republicans agree in principle on this deal, and there's no guarantee McCarthy has those votes. He's working with around a 5-vote majority: If enough Far Right Republicans say no, then this can't even get to a floor vote where the Democrats could agree to it as a bipartisan act.

And that's not even addressing the possibility of one of the Freedom Caucus members calling for a "Vacate the Chair" vote of No Confidence to force McCarthy out as Speaker. I dunno if that can happen before this deal can come to a vote, but if it does the whole thing becomes a clown show.

All of that would definitely become a major Biden win, because he made the bipartisan effort to avoid economic catastrophe while McCarthy and the House GOP couldn't. Enough House Republicans could arguably go with this deal to avoid that public debacle, but then again this modern Republican Party has a history of napalming everything instead of taking the sensible option. And then Biden can step in and invoke the 14th Amendment clause anyway and resolve the debt ceiling matter altogether.

This is going to be a crazy week ahead, America.

Hope you got the popcorn popping.

Basic Things To Know About Yet Another Republican Default Threat

There's a Democrat in the White House and there's Republicans in charge of one-half of Congress, so those of you who survived 2011 and 2013 budget crises know what THAT means: Yet another attempt by the goddamn Republican wingnuts hoping to drown the nation in Grover Norquist's bathtub, forcing spending cuts on social aid that they themselves are too afraid to do on their own, and maybe even nuking the global economy just to blame the Democrats for their own sabotage.

So as we're facing another budget battle that could lead to a U.S. default and global economic meltdown, let Stacey Vanek Smith at NPR spell out what's at stake:

One of the outcomes that would happen if the U.S. defaulted would be a major hit to the United States' reputation internationally.

"It would be a disaster and the reputation of the government for meeting its debt obligations would be in tatters," says Darrell Duffie, professor of finance at Stanford's Graduate School of Business...

So much money that the country can right now borrow up to $31.4 trillion, a debt ceiling that will need to be raised or suspended to avoid a default.

And if the U.S. defaults, the interest rate on the country's debt would go up because the U.S. would be seen as riskier: too politically dysfunctional to get its bills paid on time...

An actual default would also deliver a massive shock to financial markets, raising the prospect of a new global financial crisis.

Investment bank UBS estimates the S&P 500 could fall by at least 20%. Bond markets would tumble, and that would send borrowing costs higher across the economy including for already-high mortgage rates.

And banks would be hit as well given that lenders are among the major investors of government debt. As a result, depositors and investors could start to worry about whether banks are on solid ground at a time when the banking sector has recently suffered through the failures of three smaller and regional lenders...

(Economics professor from University of Michigan Justin) Wolfers says if the U.S. defaults and there's no more money to spend, the government suddenly wouldn't have cash to run basic operations, things like schools and roads.

Government workers could get their pay delayed if the government runs out of cash, while businesses that have contracts with the governments might also stop getting paid for a while.

And the list of people who may not get vital government benefits is long, including most prominently veterans who rely on these payments as a lifeline as well as retirees who rely on Social Security payments.

All those missed payments would have a direct impact on the economy...

The shock to financial markets and the impact across the board would be blows of such magnitude that many experts believe would lead to a U.S. recession: unemployment could spike, lending could freeze up and the economy could shrink...

All of these things are wonderful in the eyes of the Far Right, because they can use all of that to blame Biden and the Democrats even though THEY'RE the ones insisting the federal government defaults on our national debt. They've done this shit before, and while they took some of the blame the Republicans didn't lose control of Congress at the ballot boxes in 2012 and 2014 while the Democrats were hit with "both sides at fault" blame by a short-term-memory mainstream media.

The big reason for Republicans holding the debt ceiling vote hostage is that it brought Joe Biden - who lived through these fights ten years ago and promised not to make the same mistakes - to the negotiating table over the Republicans' budget-slashing agenda.

Try to remember, kids: Between 2017 and 2018 the Republicans had FULL control of the budget process, with both wings of Congress AND donald trump in the White House eager to sign off on anything they sent him. The Republicans succeeded in passing a massive tax cut bonanza for the rich, but refused to commit any major spending cuts to balance their budgets. Even they knew full well any slashing of the social safety net like Social Security, Medicare, Food Stamps, and any other public aid would have been political suicide for their party.

Which is why, whenever the Democrats are in partial or complete control of Congress and the White House, the Republicans will do everything they can to force the Democrats to do their dirty work for them and get the Dems held accountable if any social aid does get cut.

But this time around this game of fiscal brinkmanship is a little different, and more terrifying.

There's still a faction of the House Republicans - the Freedom Caucus - that wants more than just the massive spending cuts that the rest of the Republicans would be happy with: The Freedom Caucus doesn't want the debt ceiling to go up under any circumstance. These wingnuts want the federal government to default no matter what.

It's more than just crashing the national and global economy just to make Biden look bad for 2024: These wingnuts are convinced it will bankrupt and flush out an entire federal bureaucracy they fear is too far liberal/Woke for them to ever control. The Freedom Caucus honestly wants to burn the whole government down so that they can take over and rebuild their fantasy utopia on the ashes.

In the previous budget showdowns, these Freedom Caucus members were too few to hold up any compromise deals that were eventually hammered out in 2011 and 2013. THIS TIME, the caucus has the advantage of a tiny Republican majority in the House. Speaker McCarthy has basically a slim five-vote advantage over the Democrats, and all it can take is five angry wingnuts from his own party to nuke every deal and bring on that default.

Making it worse is that McCarthy, in order to gain that speakership, granted his party a "No Confidence" veto power where a single congresscritter could call for his removal. Any attempt to get centrist Democrats to cross the aisle and help him with a budget deal would trigger that revolt.

There's a less-likely scenario where the other saner Republican factions - the ones who will deal for spending cuts but won't cross the line of driving the entire planet over the cliffs - could threaten their own "No Confidence" on McCarthy to force him to ignore the Freedom Caucus, but that would lead to open schism and the Republicans still have enough intra-party discipline not to fall apart like that. Yet.

We are looking at three scenarios at this point:

1) President Biden refuses to play the Freedom Caucus' game of default, and calls on his authority under the 14th Amendment to maintain the nation's full faith and credit: Or even more fun, mint the trillion-dollar coin. That could lead to the House Republicans pushing for impeachment - which will fail - and more likely force a legal court battle that would go to an ultra-conservative Supreme Court that may side with the wingnuts to re-interpret the Constitution to allow economic havoc.

2) Nothing gets resolved, and the debt ceiling triggers a default. The Freedom Caucus gets exactly what they want. The global economy goes into a tailspin and Gods help us if the Republicans use this to regain full control in 2024. More likely is that even the deep-pocket billionaires supporting the GOP are hit hard by the recession to where they hold back on funding, and enough voters get angry enough at the real culprits to instead re-elect Biden and throw enough Republicans out of the House to reflip it back to Democrats.

3) The Freedom Caucus refuses to budge on their stance even with major concessions from Biden on spending cuts, driving enough Republicans in unsafe congressional districts to quit the party and flip the House now to where the Freedom Caucus lose their power. Granted, this is pure wish-fulfillment on my part, but given the hard-line position of that caucus there doesn't seem to be any other sane option left to the nation.

By most reports, we're looking at the debt ceiling to kick in during the first weeks of June.

By all evidence, the Freedom Caucus - as an act of sedition - is more than happy to let our nation fail.

By all rights, saner heads should prevail and kick those self-serving destructionists out of power.

You Know What? Mint That Coin, Just Do It Already

...In fact there are three freely convertible currencies in the Galaxy, but none of them count.
The Altairian Dollar has recently collapsed,
the Flainian Pobble Bead is only exchangeable for other Flainian Pobble Beads,
and the Triganic Pu has its own very special problems.
Its exchange rate of "eight Ningis to one Pu" is simple enough, but since a Ningi is a triangular rubber coin six thousand eight hundred miles along each side, no one has ever collected enough to own one Pu.
Ningis are not negotiable currency, because the Galactibanks refuse to deal in fiddling small change.
From this basic premise it is very simple to prove that the Galactibanks are also the product of a deranged imagination.
-- Douglas Adams, from the Restaurant at the End of the Universe (to be read in Stephen Fry's voice) 

With the wingnut Republicans regaining control of the House - and again back on their obsession with destroying the federal government and the global economy in one fell swoop, even with all the warnings about what the damage will be - the talk about government shutdowns has returned.

The Democratic response to the Far Right threats of massive spending cuts has been mixed, bouncing between allaying fears to bringing up alternative spending methods to outfox the Tea Party/Freedom Caucus hijackers hoping to crash the whole bus over the cliff. One thing the liberal and left-leaning blogging punditry keeps throwing out there is the "MINT THE COIN" idea.

The Coin refers to a law on the books allowing the U.S. Mint to issue a platinum-based coin with any denomination (face value) assigned to it as needed. For example any one-ounce gold coin has a $50 face value, the half-ounce gold coin is $25, etc. When they passed the law in the 1990s, the intent was to give the US Mint a means to raise money selling to avid coin collectors who buy these things up not for the metal's worth but for the collectible value. 

At the time, the idea was that a collectible platinum coin could go for like $500 or $100 or something above the gold coin (capped at Ye Olde Fiddy). Thing was, when the Republicans became more radical and more desperate to gut the federal government's fiscal capabilities since then, someone got the idea that the U.S. Mint using the backing of the "Full Faith and Credit" clause in the Constitution could issue a platinum coin with a face value more than what the federal debt would be, and using that to pay off said debt so the radicals would lose the "debt ceiling" hostage they've been threatening to kill since the Obama years. Various government officials and economists have looked at the scheme, and announced "it could work."

With the debt ceiling crisis back for 2023, the Mint the Coin talk is back as well. As Mike the Mad Biologist blogged recently: 

This bit of arcana matters because Speaker McCarthy in his desperate attempt to stop getting punched in the nuts on national television over and over again to win the House Speaker position has promised to use the debt ceiling–the process where Congress sets a cap on the amount of debt that can be issued–as economic terrorism to force all sorts of horrible policy, including sweeping Social Security cuts. Admittedly, this is a long-standing Republican strategy, but it’s become increasingly likely they will do this...

This is really stupid and ridiculous, but so is any Congress that contains QAnon conspiracists, outright fraudsters, and pedophile pimps. Meanwhile, Biden won with the majority of the vote. It’s time for him to exert his popular mandate and protect the full faith and credit of these United States...

Minting the Coin may be a ridiculous option, but it has the value of being 100 percent legal compared to some of the other options ahead of us to avoid the GOP shutdown. Dylan Matthews noted at Vox:

The Obama administration found the idea too unserious there to use, but the legal case for minting the coin is as solid as platinum. Just ask debt ceiling hardliner Sen. Mike Lee (R-UT), who was sufficiently concerned about the option to introduce legislation to close the platinum coin loophole. The plain text of the 1997 law clearly allows the treasury secretary to do this, and Jay Powell, the Fed chair who in a past career was an expert on the debt ceiling and its dangers, is arguably legally required to accept the coin as a deposit.

You can also imagine more serious variations on the concept. Progressive economist Mike Konczal once proposed issuing a $20 billion coin every day to keep the government running until Congress agrees to abolish the debt ceiling for good. And a $20 billion coin is, what, 1 percent as silly as a $2 trillion one?

The other options Matthews explores - Invoke the 14th Amendment's clause that the validity of the Public Debt shall not be questioned, argue that the debt ceiling is unconstitutionally interfering with the mandates Congress already gave to the Executive branch, or issue "quasi-debt securities" like government war bonds to temporarily avoid the debt crisis - all have the problem of getting challenged in the courts. Any of that would risk the possibility this current Supreme Court - controlled by Far Right jurists - using the situation to rewrite the Constitution, and giving the wingnut Republicans the chance to collapse the federal government.

The Platinum Coin can't be challenged, not in a way that could risk nuking our nation's ability to literally print money. Silly idea, yes. Legal idea, still yes.

The whole "Mint the Coin" thing is so silly I love it. It's absurdism brought to a political stage already overwhelmed by Far Right hypocrisy and faux Fox-Not-News outrage. Republicans want to destroy our nation's economy with another government shutdown? Here's a single coin to resolve the whole matter, nyah.

Hell, I want the Mint to print that coin now, just for the thrill of it. Think, A TRILLION DOLLAR COIN, small enough to fit in a pocket. It'll be like Scrooge McDuck's Number One Dime, a tempting target of cat burglars everywhere. The comic book and action movie industries would have a field day coming up with stories about the Coin Heist to End All Coin Heists. And then all you gotta do is go to a country that won't press charges and slap that coin down on a bank counter and demand the bank cash it in for you. BWHAHAHAHAHAHAHA (dude, could that happen?)

You could put the Platinum Coin behind glass and take it on a tour to every Economics college across the nation. It'll be the Mona Lisa, the King Tut Coffin, the unreleased copy of the Batgirl movie of coins. Have students working towards their MBAs lining up $5000 a ticket just to press their noses against the glass and dream of touching that coin.

Get that coin pressed today, US Mint, and President Biden could use it as the coin flip to this year's Super Bowl!!! YES!!!!!

So many possibilities with a Platinum Trillion-Dollar Coin.

Do it, Treasury Secretary Yellen. PRINT THE COIN. BECOME A GOD. BWHAHAHAHAHA.