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Gordon L. Weil formerly wrote for the Washington Post and other newspapers, served on the U.S. Senate and EU staffs, headed Maine state agencies and was a Harpswell selectman.
Five people hold in their hands the fate of the dollar as the world’s standard currency.
They may force the federal government into a partial shutdown. If so, it won’t be able to keep its commitments or pay its bills. That would lend support to China’s claim that its authoritarian style of government works better than American democracy.
The situation arises because Congress faces a war over raising the limit on the federal debt. It’s crunch time, according to Treasury Secretary Janet Yellen. Without the increase in the debt ceiling, the dollar, the economy and the U.S. standing in the world can soon suffer badly.
The five people who could settle the issue are Republican members of the House of Representatives, now controlled by the GOP by nine votes. If any five Republicans break ranks, the ceiling could be raised. Because the votes of both the House and Democratic Senate are required to lift the ceiling, the GOP House majority becomes critical.
How did the Republicans gain their narrow majority, replacing a similar scant Democratic lead? It was the payoff for efforts in state legislatures in redrawing congressional districts designed to produce more GOP winners. This political gerrymandering, sometimes a way of preventing the election of African Americans, has been left largely untouched by the federal courts.
In New York, however, it was a court with Democratic nominees who rejected the Democratic effort at gerrymandering, handing the design to the Republicans. The Democrats lost four House seats, three to the GOP possibly due to redistricting and one after the census cost the state a seat.
One of these seats went to George Santos, now the most celebrated liar in the House. His bio, ignored by both parties, made him a dream candidate in a somewhat newly designed district. Only after he won did voters learn that his bio was pure fiction. Santos is now so precious to the slim Republican majority that they ignore his creative writing.
With votes from both Democrats and Republicans, Congress voted for major spending bills for COVID help and infrastructure, both consistent with policies of former GOP President Donald Trump and Democratic President Joe Biden. An enthusiastic Congress gave Biden, supposedly a big spender, more money for defense spending than he had requested.
Now, the House Republicans want to pare back some federal spending, hoping that the debt limit would not have to be increased. It’s really a backdoor way to repeal what has already been approved and partially spent.
On a broader level, the issue reflects the policy differences between the two parties. The Republicans believe that the federal government has grown too large and the most effective way to reduce its size and scope is to reduce overall spending. That might be easier than going after specific budget items.
One GOP House member has shown concern about the strategy. Texas Rep. Tony Gonzalez was the only Republican to vote against the new House Rules that could lead to a refusal to raise the debt ceiling. He worried that reducing spending could mean cuts to the military budget.
The Democrats support expanded government programs that they see as meeting public needs. As people come to rely on agriculture payments or defense-related jobs or bridge repair, they do not want spending cuts. Overall federal outlays grow. With no political appetite for tax increases, borrowing must increase.
This domestic political war, conducted with an eye on the 2024 elections, could have consequences going far beyond the budget. American economic power and world leadership depend heavily on the reliability of the dollar. That in turn is based on the certainty that the country always pays its bills, including making debt payments.
The Republicans may simply want to force Biden to agree to limited cuts, before they accept any debt ceiling increase. But reductions in already approved spending could harm GOP constituents. Maybe that’s what the Democrats are counting on plus the GOP’s need to avoid political responsibility for a shutdown.
A few Republicans might accept symbolic cuts and approve the increase. That could help several of them, including the three new faces in New York, who won narrow races in districts that could flip back to the Democrats.
Or Biden could try to ignore the issue. The Constitution says: “The validity of the public debt, authorized by law, … shall not be questioned.” Spending has been formally approved without funding from taxes, so Congress understood that debt would be issued. The federal debt is now $31.4 trillion. Doesn’t refusing to raise the debt limit question already authorized debt?
Failure to raise the debt limit could cause major damage or just be part of a political game. Or both.