By Will Bellaimey:
This is Historically Speaking, the series where we talk about what's happening in the news and how it relates to things that have happened in history. I'm a history teacher and, as always, I feel like there are so many different things happening in the world right now that we could talk about, but probably the biggest one in the news is the debt ceiling crisis.
President Biden came back early from a trip abroad to try to deal with this situation, which is a kind of trick of the American system where we now have the potential to shoot ourselves in the foot and default on our debt for the first time in history because Congress may not authorize the raising of the debt limit to cover the spending that they've already spent.
Theoretically, any time the United States government wants to borrow money, they have to get permission from Congress to do so, because under the Constitution, Congress has what's called the power of the purse—the power to decide how we're gonna spend pretty much any amount of money. In this case, they've already decided how to spend that money—they just need to authorize the debt to cover it.
What's happening right now is the consequence of the midterm elections where the Republicans took over the House, and many of them have no interest in making any sort of deal with Joe Biden or, at the very least, have an interest in pushing the power of controlling the House of Representatives as far as they can. This is a similar situation to what happened under the Obama administration, when Ted Cruz and other Republicans after the 2010 midterms pushed to use the debt limit as an opportunity to get concessions. It did end up leading to some pretty significant spending concessions. President Biden was in the White House at that time and led the debt ceiling negotiations and has no interest in allowing this kind of hostage-taking to take place—at least that's how he conceives of what's going on. His position has been that there should just be what's called a "clean" debt limit raise, where there are no conditions attached.
Kevin McCarthy, who went through one of the longest votes for speaker of anyone, is basically beholden to some of the most extreme members of his own party and has very little motivation to just let Joe Biden have whatever he wants. So, yet again, we have a showdown in American politics between two parties that are playing more to their political base than to anyone else—and the rest of us are kind of sitting in the balance.
As so often has happened in the years since the political battles between Newt Gingrich and Bill Clinton in the 1990s, we have two parties who are playing more to their own political base and to the desire to seem strong than they are to what would actually be good for the economy.
The treasury department and economists are all saying, "Are you serious?"
Allowing a default would likely lead to chaos in the marketplace and would also probably make it more difficult for the United States to borrow money in the future, or at least make it more expensive to do so. The United States treasury issues bonds that are considered some of the safest in the world. If at some point it seems like we can't actually count on the full faith and credit of the U.S. government, that's a huge change within the economic system.
I think any true investor would recognize that what we're ultimately talking about is do you trust the U.S. government to pay back its debts? Even with all the chaos within our political system, I think in the long run, most people do expect that the richest country in the world will be a trustworthy creditor. But the potential now exists, in the short run, to negatively affect people's retirement accounts and people's savings and anything that's either in bonds or more likely in the stock market. That is what is making this such a high stakes
So you might ask yourself:
Is this actually a smart political move, to basically play chicken with the U.S. economy? I think anybody who is thinking about the long run and the whole country would say, "No, that's not a good political move."
But within our political system, it's often not a question of long term or the whole country. It's a question of short term and the fear of a primary challenge. And the way our politics has become polarized, many more members of Congress—and I would say, particularly right now, Republican representatives from districts that are pretty strongly pro-Trump—are much more afraid of being challenged in the primary by someone seen as more ideologically pure than they are of losing independence in the general election.
So while it's easy for snide liberals to look at this and say, "These stupid Republicans are shooting themselves in the foot, and they're going to pay a price for this." I think the question of who's gonna pay what price should actually be driven by paying attention to how our political system works. And while people in the country in general may end up blaming the Republicans for this shutdown, as they did on many other occasions, it doesn't really matter if you're a member of Congress from a really red district—and that's another consequence of the gerrymandering that has driven our House of Representatives to become so polarized.
The other piece of this is the question of what Biden can do if he can't reach a deal with the Republicans.
The first possibility is forcing something through Congress on a bipartisan basis, which at this point would require House Democrats to use something called a discharge petition, which basically forces the whole House to vote on a bill that the majority leader (or, in this case, the Speaker of the House) doesn't want voted on. If Biden could get enough Republicans to support some other sort of compromise, he could probably pass it with the entire Democratic caucus and maybe five or six Republicans. Those Republicans would face some of the same sorts of questions that I was just bringing up about how their district would play it when a primary challenge comes up; but there are districts that are more moderate, so I think that's one possibility of how this could end.
The Fourteenth Amendment, National Archives
If that doesn't work, then there's a question of whether the president could take executive action to deal with this. That involves an interpretation of the Fourteenth Amendment of the Constitution. For people who didn't take U.S. history recently, the Fourteenth Amendment is the amendment that was passed after the Civil War to guarantee equal rights to formerly enslaved people and, theoretically, to everyone in the United States. It also contains a clause that says the public debt of the United States shall not be questioned, which came from the fear that when you brought back former Confederate sympathizers into the Congress, they might basically use the war debt to hold the government hostage and not pay creditors as a way of harming the country that they had just fought against.
There are scholars who believe this is a similar situation, where someone for political purposes might be trying to lead to a debt default, and the president, therefore, under that clause, has the power to just raise the debt ceiling himself. I imagine that that is being very seriously considered; but they would prefer not to do that because, number one, it's an untested legal theory, which means it would probably end up at the Supreme Court. Anybody who's been watching the Supreme Court lately knows that that's certainly not a surefire bet for the Biden administration. Although I don't know that this issue truly breaks down along partisan lines.
I certainly wouldn't put money on the people who overturned Roe vs. Wade just allowing Biden to raise the debt limit.
I also think that even if you do that, you're gonna have chaos in the markets while you wait for the Supreme Court to weigh in on it. The economic implications of that are serious enough that I think Biden would rather figure out some way to get the limit raised without having to resort to such an untested approach.
Will Bellaimey teaches U.S. Government and Politics at Flintridge Prep School outside Los Angeles where he is also the director of the Los Angeles Museum of Geography, which is staffed entirely by seventh graders. His podcast, All the Presidents, Man, is available here.