Republicans threaten economic disaster over passage of routine accounting requirement

Senate Minority Leader Mitch McConnell said Republicans will oppose an increase in the federal debt limit if Democrats pursue a $3.5 trillion, 10-year infrastructure plan that is needed to strengthen social and environment programs by investing in working-class Americans and creating millions of jobs.

The Kentucky Republican’s threat was the most explicit he has been about his desire to force Democrats to cut back on President Joe Biden’s domestic policy agenda— which includes getting control over the coronavirus pandemic, which has killed more than 600,000 Americans, and restoring the US economy.

McConnell’s comments indicate that another unnecessary budget showdown between the two parties will put the government’s financial integrity in jeopardy. A similar debt-ceiling crisis was prompted by Republicans in 2011 and again in

The international community criticized the government for political brinkmanship in Washington as “dangerously irresponsible” and Standard & Poor’s downgraded the long-term credit rating of the United States government for the first time in its history, from AAA to AA+.

Currently, Standard & Poor’s credit rating for the United States stands at AA+ with stable outlook. Moody’s credit rating for the United States was last set at Aaa with stable outlook. Fitch’s credit rating for the United States was last reported at AAA with negative outlook. DBRS’s credit rating for the United States is AAA with stable outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of the United States thus having a big impact on the country’s borrowing costs.

America is suffering from massive inequality that has resulted from Reagan-, Bush- and Trump-Era Tax cuts passed by Congress, sending the national debt spiraling higher while shifting the cost of government away from corporations and the richest individual taxpayers.  

In April 2021, the Biden administration announced the “American Families Plan,” which proposed responsible tax law changes to increase taxes on both corporations and high-net worth individuals, and to provide more resources to enhance IRS tax enforcement efforts.

Conservative political groups have been mobilizing against the bipartisan infrastructure deal, hoping make it harder for the U.S. government to collect unpaid taxes.

Over the last 30 years, wage inequality in the United States has increased substantially, with the overall level of inequality now approaching the extreme level that prevailed prior to the Great Depression. Republicans successfully obstructed Biden’s attempt to raise wages for working Americans.

Since 1981, America has failed to invest in critical maintenance of its roads, bridges, energy and communications networks, waterworks, or other capital investments commonly lumped together by the term ‘infrastructure.’

If it does not start spending to keep these systems working, America will soon meet every definition of a Third World country, such as an unstable economy, massive amounts of poverty and high mortality rates, particularly among infants.

Without corrective measure like those proposed by President Biden and Senator Bernie Sanders, America will soon have an upper class and a lower class. Without a middle class to fill the gap, there is almost no way for a person to escape poverty because there is no next step for them on the economic ladder.

Legislation renewing the government’s ability to borrow money incurs no new debt and simply pays for already enacted spending and tax breaks, and it mystifies economists who believe there are better ways to conduct fiscal policy.

The party not controlling the White House often uses such moments to seek leverage, such as when Republicans pressured President Barack Obama into a 2011 deal that cut spending.

The government’s ability to borrow cash to finance its operations expired Aug. 1, when a two-year-old temporary suspension of borrowing limits lapsed. The Treasury Department has used emergency accounting measures to keep the government afloat, but the nonpartisan Congressional Budget Office has projected that those actions will suffice only until October or November.

If the government loses the authority to borrow money, it could trigger a federal default for the first time in history, which would badly damage the economy, possibly ending the worldwide status of the US dollar, forcing up interest rates and federal borrowing costs.

Last month, McConnell said he couldn’t “imagine a single Republican” voting to raise the spending ceiling in an environment of “free-for-all for taxes and spending.” Every Republican voted to raise spending, deficits and the debt ceiling while Donald Trump occupied the White House.

The national debt increased by almost $7.8 trillion during Trump’s time in office. That’s nearly twice as much as what Americans owe on student loans, car loans, credit cards and every other type of debt other than mortgages, combined, according to data from the Federal Reserve Bank of New York.

Trump’s contribution to the national debt amounts to about $23,500 for every person in the country.

Republicans are poised to unanimously oppose the Democratic plan to begin pushing a budget resolution outlining their $3.5 trillion domestic programs package through the Senate.

“If our colleagues want to ram through yet another reckless taxing and spending spree without our input, if they want all this spending and debt to be their signature legacy, they should leap at the chance to own every bit of it,” said McConnell.

“Let me make something perfectly clear: if they don’t need or want our input, they won’t get our help. They won’t get our help with the debt limit increase that these reckless plans will require.”

Democrats control the 50-50 Senate only with Vice President Kamala Harris’ tiebreaking vote.

On most bills, Republicans use filibusters to force Democrats to get 60 votes to halt the delaying tactics. McConnell’s comments indicated that GOP senators would not provide the needed support.

Democrats are not without options but they have not yet decided on what to do.

At least for now, Democrats seem unlikely to trim their plans to finance education, health and environment programs that are the backbone of Biden’s policy aspirations although some moderates are insisting on appeasing the obstructionist GOP.

Democrats could put provisions raising or suspending the debt limit into the $3.5 trillion bill they plan to write this fall that would enact the specific tax and spending changes envisioned in their budget resolution. Democrats plan to use special procedures to shield that bill from a GOP filibuster, but it might not be ready before the Treasury exhausts its accounting maneuvers.

The government’s current debt ceiling $28.4 trillion. Federal borrowing has grown at record rates amid programs aimed at supporting the pandemic-battered economy.

The complicated economic policy questions concerning the government’s debt ceiling was put into short, easy-to-understand dialogue by Aaron Sorkin in one episode of The West Wing, in which Toby Ziegler explained the consequences of failure to pass the authority: Yeah, y’know, the immediate collapse of the U.S. economy, followed by Japan sinking into the sea, followed by a worldwide depression — the likes of which no mortal can imagine — followed by week two.

Asked by Annabeth Schott, “So this debt ceiling thing is routine or the end of the world?” Ziegler replies, “Both.”

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