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– ANALYSIS –
With the national buggy heading for the edge of the debt default cliff — with each party claiming to be the helpless passenger tied up in the back seat while the other one is DUI — millions of Americans, their finances at risk, naturally have wanted to know just what the hell is going on.
The basic narrative is not in dispute: The Republican House won’t vote to raise the debt ceiling, and thus keep the US from defaulting on its debts, unless the Biden administration agrees to massive cuts in federal spending.
Beyond that, the media has been helpful, to a point. The left-leaning media has been reasonably accurate in analyzing stakes, motives, and context. But the right-leaning media just seems to be making up the story out of whole cloth.
So, at the risk of oversimplifying, let’s just tell it like it is: It’s a political game of chicken in which one side (guess which one!) holds the high cards because it has calculated that driving over the cliff — i.e., failing to cover debts the US has already incurred — would work to its political advantage. And political advantage, and maintaining a grip on power, is all that seems to matter of late.
Let’s first look at some of that right- and left-leaning media coverage of the debt crisis.
Gluttonous Spending?
The New York Times calls out the “dangerous game” being played by House Speaker Kevin McCarthy (R-CA) and the “mix of outlandish demands and reckless threats” being served up by the Republicans, while crediting President Joe Biden with offering the blackmailers “a reasonable path to resolve the standoff.” That perspective is fairly typical of the view from the center-left.
Meanwhile on the right — and by no means the far right — the Chicago Tribune shifts the focus to the Democrats’ “folly of recklessly overspending the country into insolvency.” In the Tribune’s telling — which, as with the Times, is a fair representation of its side of the aisle — the Republicans have desperately tried to hold the line on fiscal responsibility while, over the past 10 debt ceiling battles, dating to 2010, “Democrats bitterly fought to defend their addiction to gluttonous, inflation-friendly spending.”
Ignoring for the moment the fact that Donald Trump, after campaigning on a promise to reduce it, instead added a whopping $7.8 trillion to our national debt (an increase of just about 40 percent) without so much as a clearing of the throat from congressional Republicans, let’s just look at all that “gluttonous, inflation-friendly spending” that surely must have bedeviled our economy during the Obama years and every time the Democrats had a say in fiscal matters.
Perhaps someone should have pointed out to the folks at the Tribune — and all their right-leaning media colleagues busy justifying the GOP’s debt ceiling stick-up as the only way we’ll ever get a handle on out-of-control spending, the ballooning debt, and the inflation it supposedly causes — that the average annual inflation rate under Democrat Barack Obama was 1.75 percent, which is below the Federal Reserve’s target rate of 2 percent. Oh, and the “gluttonous” Obama managed to cut the annual federal deficit he inherited from his Republican predecessor George W. Bush by more than half.
Though I strongly suspect the right-wing opinion-mongers already know all this. They also probably know that the current inflation rate of 4.93 percent (down from a high of 9.1 percent in 2022) has in large part been driven by COVID-related disruptions and corporate gouging, and is effectively global in scope.
Nonetheless, they seem rather unperturbed by the idea of leveraging the threat of the national and global economic disaster that a US debt default would bring in order to force massive cuts, up to 50 percent, in federal spending for everything other than defense, veterans benefits, Social Security, and Medicare. That includes everything from poverty and environmental programs to certain areas of law enforcement — though it’s hard to see how, say, crippling the Internal Revenue Service’s ability to audit and collect from high-rolling tax cheats is going to do much to reduce the national debt.
Which brings us back to the question: What is really going on here? And, more generally: What are virtually all our political battles over the economy — over taxing and spending — really about?
Wolfing Down the Pie
Can I put this any simpler? They’re about who gets stroked and who gets screwed, economically — how that great big overstuffed national pie gets divided. If you want to call it “distributive justice” you won’t be far off.
Right now we’re living through an era of distributive injustice. Human history has seen many such eras, two of the better known being the late 19th century American Gilded Age and the “Let them eat cake” decades preceding the French Revolution.
For a while, in the wake of the New Deal and the Civil Rights Movement, the US seemed to be doing a decent job of spreading the wealth. There was no wealth tax per se, but inheritance taxes took big bites out of big fortunes and top income tax rates were in the 70 to 90 percent range, so that, even with the many generous loopholes available to the rich and well-connected, high earners were relieved of at least some of the money they had no real use for, and the government was able to help the less fortunate in a variety of ways.
Things were far from fair, let alone perfect, but the concept of distributive justice seemed to have been embraced, at least on paper.
Then came Ronald Reagan and the bill of goods that was “trickle-down economics.” Cut taxes, especially on corporations and the wealthy, and somehow, the theory went, the excess loot accumulated by very rich people (and corporations) will find its way into the pockets of everyone else, from the middle class to the huddled masses. It didn’t. It doesn’t. It never has or will, no matter how often “trickle-down” is repackaged and sold to a new generation of suckers.
The record is clear: Not only have Republican administrations been worse for the economy as a whole, they have been income- and wealth-inequality disasters. And you can add to that some Democratic administrations, such as Obama’s, for six years of which a Congress under effective GOP control impeded pretty much any attempt to lessen the wealth gap.
You may have wondered, with the annual deficit and cumulative national debt setting off such alarm bells over there on the right, why the possibility of addressing the “crisis” by restoring some of the GOP-gutted higher tax rates on the morbidly rich has not only not made it onto the table, but has not been seen in the same room, building, or town where that table is located.
We’ve had the Reagan tax cuts, the Bush tax cuts, and the Trump tax cuts — all of which dramatically reduced federal revenue and heavily favored corporations and the wealthy. Bing, bang, boom — is there any great mystery why the national debt ballooned and US wealth and income inequality surged to record levels, so that by the time Trump left office the top 0.1 percent held more than six times the wealth of the bottom half of Americans?
If that doesn’t strike you as obscene, then mail back your liberal-cum-socialist secret decoder ring and consider voting Republican. But how does the debt ceiling battle figure into this?
Taxes? Did Someone Say Taxes?
Well, you may have wondered, with the annual deficit and cumulative national debt setting off such alarm bells over there on the right, why the possibility of addressing the “crisis” by restoring some of the GOP-gutted higher tax rates on the morbidly rich has not only not made it onto the table, but has not been seen in the same room, building, or town where that table is located.
The answer is quite simple: The GOP’s aim, now as always, is to help the rich (who, a reasonable person might conclude, don’t need any help) and hurt just about everyone else, especially the poor. One gets the distinct impression that there is no upper limit to how far they would go, how much they would take, if they did not, in their forays, bump up against the guardrails of a deeply flawed and compromised democracy. In a nod to the ongoing necessity of electoral victories, as many have noted, the culture wars were started mainly to distract the attention of those perpetual victims of GOP economic policy.
Nuclear Weaponizing a Technicality
The Republicans have now seized upon a golden opportunity to further that aim big-time by holding the threat of a disastrous US debt default over the head of the Biden administration and giving the president and his party essentially two options: 1) Gut their own agenda, with its significant gestures in the direction of distributive justice and environmental stewardship, thereby sharply increasing the prospects of a major recession in election year 2024; or 2) Let the US default on its debt, thereby triggering a massive economic downturn, if not outright collapse, with major implications for national security and our nation’s global standing.
Rightly or wrongly, the American public thinks that presidents own the economy. So a collapse, even a downturn, on Biden’s watch would clear the path for Trump (or another MAGA Republican nominee, should Trump, like the unfortunate Miss Otis, have to send his regrets) in 2024.
Why would Kevin McCarthy do such a thing? Well, for one thing, because he can. It certainly looks like he holds the cards: Rightly or wrongly, the American public thinks that presidents own the economy. So a collapse, even a downturn, on Biden’s watch would clear the path for Trump (or another MAGA Republican nominee, should Trump, like the unfortunate Miss Otis, have to send his regrets) in 2024.
For another, McCarthy very much wants to continue being House speaker and that is very much contingent on the support of the burn-it-down hard right led, rather surrealistically, by the likes of Rep. Marjorie Taylor Greene (R-GA).
But let’s face it, with a razor-thin House majority of four net seats — thanks to the continued presence of the indicted but unexpelled Rep. George Santos (R-NY) — just a handful of “moderate” Republicans could break ranks and end the game of chicken short of the cliff’s edge.
There is no sign that any plan to do so. Instead, notwithstanding some talk of invoking the section of the 14th Amendment that states that “[t]he validity of the public debt of the United States, authorized by law … shall not be questioned,” it is increasingly likely that Biden and the Democrats will, as they say, “cave.” He has already shortened his G7 trip, snubbing key allies Australia and the Pacific Islands, to hurry home and strike a deal before the Treasury runs out of ways to get around the ridiculous (and just about unique — of all 195 nations, only Denmark and the US have a hard ceiling, and Denmark’s is set too high to ever threaten default) vintage-1917 anachronism that is our debt ceiling.
What Biden will wind up surrendering we’ll likely find out soon enough. But odds are it will be substantial, and will negatively impact the economy, the baby steps the US has taken toward distributive justice since 2021, and, for good measure, the Democrats’ election prospects. Not to mention the prospect of going through the whole shakedown again the next time we approach the ceiling, which is likely to be soon enough. Or we’ll just go over the cliff and the misery and chaos will bring our democracy one step closer to its demise.
The MAGA Republicans smell a big win-win for themselves — and don’t give a damn if it means a colossal lose-lose for their country. That’s what this debt ceiling “crisis” is all about.
Jonathan D. Simon is a senior editor at WhoWhatWhy and author of CODE RED: Computerized Elections and the War on American Democracy.
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