Joe Biden does not want to cut one single solitary dollar from the $5.2 trillion in spending he’s added since he took office. Because of that, he’s willing to allow the United States to default on its debt obligations.
Biden will meet today with congressional Republicans to talk about the weather. Or the NBA playoffs. Anything but the problem: to spend the money already appropriated by Congress, Congress has to pass, and Biden has to sign, legislation to raise the limit on the national debt.
Biden has sworn he’s not even going to talk about a deal to raise the debt ceiling with Republicans — so he says. Actually, Biden has no choice but to negotiate, and the fact that he’s waited this long means he may regret the delay.
The Bipartisan Policy Center came out with a report showing the debt ceiling will be breached sometime in early June, July, or even August. The inexactitude is maddening but is based on the fact that no one can predict how much in tax receipts the government will take in over the next few weeks.
What is known is that at the end of June, the government can tap into $145 billion in one-time “extraordinary measures,” buying the government a little more borrowing power into the summer.
Related: The Democrats’ ‘Secret Plan’ to Raise the Debt Limit
But it’s by no means clear the government will make it to the end of June before the Treasury Department is going to have to start choosing which bills to pay and on which they will have to claim the check got lost in the mail.
The Treasury cash crunch that could cripple the U.S. economy in the coming weeks stems in part from a disappointing tax season, mixed with delayed tax filing deadlines for residents of states like California that sit in designated disaster areas, Akabas said.
Other estimates that point to a potential debt catastrophe in early June also underscore that considerable variability in the X-date will remain — until perhaps just days before the U.S. would officially default — thanks to the often unpredictable nature of federal cash flows.
Biden’s radical-left base doesn’t want to hear about compromise. They will risk default in order to stick it to Republicans and have their allies in the media blame the GOP for any downside to default. They want Biden to do anything except negotiate a deal with the GOP. And the option they are looking at now would precipitate a constitutional crisis the likes of which this country has never seen.
Can Biden simply declare the debt ceiling unconstitutional and continue to spend money?
To resolve the standstill, some progressives are now pinning their hopes on the 14th Amendment. It says “the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
“Some legal scholars contend that language overrides the statutory borrowing limit,” The New York Times reported last week. And some in the Biden administration are buying this argument:
Top economic and legal officials at the White House, the Treasury Department and the Justice Department have made that theory a subject of intense and unresolved debate in recent months, according to several people familiar with the discussions.
On Friday, Biden said he wasn’t ready to invoke the 14th Amendment to avoid disruption in government payments. But he didn’t rule it out entirely, instead saying that he had “not gotten there yet” (emphasis mine).
It’s not simply a matter of Biden declaring the debt ceiling illegal. He can’t do that, of course, but it’s what would happen if he tried it that would precipitate the gravest of crises.
“You have to worry about the interest rates, the market reaction, the effect on financial markets that rely on Treasurys. There’s no way to avoid potentially significant economic damage given the debate that would ensue,” said David Kamin, who served as deputy director of the White House National Economic Council earlier in the Biden administration.
Uncertainty. That’s the economy killer that both Biden and congressional Republicans fear. You can listen to those who confidently state that nothing is going to happen, that the government will have all the money it needs just by spending the tax receipts that continue to roll in. That’s as simple-minded a prediction as those who confidently predict total economic disaster.
Neither side wants to test their theories on default. Biden and McCarthy will both give in substantially and a deal will be reached — much to the chagrin of the partisan extremists on both sides.
