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The Republican Debt Default [1]

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Date: 2023-05-26

Kevin McCarthy and the Republicans threaten to tank the economy if Democrats don't pay ransom

The Republicans have taken the economy hostage and have demanded a series of draconian cuts to programs affecting the poor, veterans and students in return for raising the debt ceiling for a single year. Note that this is hostage taking pure and simple. These are not negotiations in the sense that one side asks for concessions and offers equivalent concessions in return. The Republicans are demanding a set of crippling concessions from democrats and offer no concessions in return. To be specific, in these “negotiations” have refused to consider raising taxes one penny on America’s richest billionaires and most profitable corporations. In the minds of these radicalized Republican extremists, not shooting the hostage in return for Democrats paying the full ransom, is their concession.

The business community has been relatively calm in the face of the Republican threat to default on the national debt. I believe their calm is because they expect the Democrats to simply give into the Republican demands so that the Republicans will agree to not shoot the hostage, for now at least. I think that assumption may be wrong. This time, the Republican Debt Default is not going to remain just a threat. I believe the current political situation is going to make it a reality. The following are possible scenarios of how the Republican Debt Default can be responded to. Spoiler alert. Actual default is the most likely outcome.

Option One – Complete Cave. The Democrats can appease the Republicans by agreeing to all of their demands. Make the sharp cuts to aid for the poor. Get rid of the additional IRS agents that would allow them to begin to do more audits of the wealthy. Tell veterans they will have to get by with fewer healthcare visits. Roll back any efforts to fight climate change. The Republicans, the media, and I believe many in the business community assume this is a possibility. I believe it is not. The Democrats are politicians too. They have voters too. I don’t think that Biden and the Democrats more broadly can start the 2024 election cycle by making a complete capitulation to the demands of the extremist Republicans. It would be to agree to concede the next election. It would be political suicide. I don’t think even the most moderate Democrats are going to be willing to sign up for that.

Option Two – Partial Cave. A partial cave would produce most of the same problems for the Democrats as a Total Cave, because they would still be making all of the concessions, while the Republican hostage takers would concede nothing. Depending upon the specifics of the Partial Cave, this would still produce a backlash and a demoralization of Democratic voters. The Democrats would have to start their re-election campaigns explaining why they let the Republicans blackmail them into policies that injure the most vulnerable Americans. The other problem with the Partial Cave is that the Republicans probably would not accept a Partial Cave. Their leader, Donald Trump has told the Republicans to crash the economy unless they get one hundred percent of their demands. The most extreme members of the Republican caucus are quite willing to shoot the hostage unless they get the full ransom.

Option Three – A Real Deal. Of all the possible scenarios, this is the most unlikely. It would involve Republicans agreeing to tax increases on the wealthy in return for some cuts. Another word for that scenario is compromise. The modern Republican Party is organically and ideologically incapable of compromise. Despite the fact that tax cuts for the rich have been one of the major factors in increasing the national debt, the Republicans insist that only spending cuts are a legitimate way of trying to reduce debt. The Republicans are unlikely to agree to any tax increases on the wealthy. Without increases of tax revenue, Democrats will not be able to go to their voters and tell them that they’ve made a deal. There is no possibility of a deal if Republicans are unwilling to make concessions. Republicans will regard the idea of them making actual concessions toward a compromise to be laughable.

Option Four – A Discharge Petition. A discharge petition is a legislative maneuver in the House of Representatives where if a majority of House members sign on to a proposal, it can go to a vote on floor, even if opposed by the Speaker. Democrats are working on a discharge petition to do a clean increase to the debt ceiling. The Democrats need only five or six Republicans to join them in passing this measure. I believe this scenario is somewhat more likely than Option Two or Three, because it only requires Democrats to persuade five or six Republicans to abandon default as a partisan weapon. In Option Two and Three, the great majority of Republican House members would have to be persuaded to accept something other than a Total Cave. Option Four would avoid the Republican Debt Default, but it would require the support of a small number of Republicans.

Option Five – Debt Default and the Fourteenth Amendment. Unfortunately, this is the most probable outcome of the manufactured crisis that is the Republican Debt Default. Democrats are not free to totally or partially cave into Republican demands. Republicans are incapable of compromising. The titular leader of the House Republicans, Kevin McCarthy, is not really free to negotiate, since he can be fired by any member of the Republican caucus if he strays from their most extreme demands. Even if Biden was willing to do something slightly different than the Total Cave, who can really agree to change anything in the original demands voted on by the Republican caucus? This means that the real parameters of the “negotiations” are exactly along the lines that Republicans have stated – either Total Cave from the Democrats or Republican Debt Default. The other reason why Option Five is more likely is because it involves the idea of the President invoking the Fourteenth Amendment to continue to pay the nations bills, even though Republicans refuse to raise the debt ceiling under the 1917. The idea of fighting back under the banner of the Fourteenth Amendment has far more support among Democratic elected officials and Democratic voters than caving to Republican hostage taking.

Option Six – The One Percent Intervenes. Many people, particularly on the political left, assume that the Republicans won’t really default on the debt because it would hurt the interests of their wealthy donors. I think that view underestimates the radicalism of this version of the Republican Party. It has many members who do not understand or care about the damage the Republican Debt Default will do to the economy and the American people. The wealthy are currently assuming that the Democrats are going to do a Total or Partial Cave. When they realize that caving is not a realistic option for Democrats, they may then try to reign in the Republicans. With all their money and power, I don’t think the One Percent can control this Republican caucus. They would instead look for the five or six Republicans needed to support the Democratic discharge petition. In other words, Option Six would mean the One Percent would push for Option Four. Even after an actual default, it will probably come to that.

Option Seven – The People Take the Wheel. We often talk about the Republican Debt Default as them taking the American economy and the world economy hostage. But what they are really doing is they are taking the American people hostage. But unlike a movie about kidnapping in which the hostage is helpless until someone comes to rescue them, here the hostages can go after the hostage takers themselves. They can and they should do it now. The people need to demand and clean increase to the debt ceiling now. If enough people make that demand to their Republican representatives, the Republicans will blink. They want to get re-elected too. The people need to let the Republicans know that they are aware of what they are doing and that they will hold the Republican Party responsible if there is a default. If enough people speak out now, we can head off a default. If not, we need to hold every Republican official accountable at the ballot box.

I believe a Republican Debt Default is coming. Democrats can only stop it with a Total Cave, which would in turn destroy the Democratic Party’s electoral prospects. When the Republicans Debt Default is executed, they will blame the Democrats. They will blame Joe Biden. The right-wing media will accuse the Democrats of being totally responsible for the Republican Debt Default. The rest of the corporate media (ABC, CBS, NBC, CNN, MSNBC), will tell a “both sides” narrative, in which the Democrats and Republicans are somehow equally responsible for the Republican Debt Default. Democrats need to make sure the Republicans own the Debt Default as they should. The Republican leader, Donald Trump, has already told the Republicans to default unless they get everything that they want. That is a very valuable piece of videotape. Democrats need to emphasize that Republicans are willing to blow up the economy to hurt ordinary working-class American families because they are unwilling to raise taxes one penny on the superrich. If and when Republicans default on the debt, it is going to cause a downturn comparable to the Great Recession. Democrats are going to have to fight as they rarely fought before to make sure that Republicans are not rewarded electorally for sabotaging the economy. When the Republican Debt Default is executed, it will become the issue of the 2024 election. Democrats will have to fight to win to begin to rebuild the economy and our democracy.

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[1] Url: https://www.dailykos.com/stories/2023/5/26/2171656/-The-Republican-Debt-Default

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