Get ready to laugh, folks, because this article is about the United States’ debt ceiling negotiations — and who knew those could be funny? Republican House Minority Leader, Kevin McCarthy, has a plan to use the approaching deadline to raise the debt limit as an opportunity to force policy concessions from President Biden. He wants spending cuts and other changes to the policies that he thinks are crippling the American economy. McCarthy says that the country can’t default on its debt, but higher taxes, higher interest rates, more dependency on China, and an economy that doesn’t work for working Americans are no good either.
It’s like déjà vu all over again for McCarthy and his party because they threatened to use the debt ceiling as leverage in 2011, and the stock market tanked. Yet, he chose to address the stock traders on Wall Street to make his case this time. Maybe he’s hoping they’ll be too busy laughing at his comedy to notice the potential political disaster he’s trying to create. The Dow Jones didn’t seem too fazed by his speech, briefly rising shortly after he finished.
McCarthy wants to be like Ronald Reagan, who promised a federal budget that would create jobs and help the economy grow. But Reagan wasn’t dealing with a COVID-19 pandemic and a deeply divided country, so McCarthy’s plan may be a bit more challenging to achieve. The GOP and House Republicans want to force the president to accept their policy changes before they agree to raise the debt limit again, but the White House won’t give in. The consequence of doing nothing could create the first-ever government default and plunge the economy into chaos.
The crux of the issue is a little something called the United States’ credit score. Both parties have spent money on expenses, and the government has borrowed to cover those costs. But they can’t do that forever, so they have to raise the debt limit periodically, or we risk defaulting. Well, we technically reached the debt limit earlier this year, and the pressure is on to figure out a solution before the consequences get worse. McCarthy’s plan to use the debt ceiling as leverage is not making things easier.
McCarthy’s Party is also dealing with a bit of a “hurry up and wait” situation since they took control of the House in January. They want spending cuts, policy concessions, and everything else they’ve been asking for since their victory. The White House has refused to negotiate since they don’t want to damage the country’s credit in any way, and Republicans’ disagreement on how to move forward has created a stalemate. McCarthy wants to do something before the looming deadline, which could be only seven weeks away.
Republicans hope that they can get enough members to agree and push their plan forward, but with only a four-vote majority and tensions high in the party, it’s anyone’s guess if they’ll get the votes they need. Moore, the Heritage Foundation’s leading economist, says it’s time to fix the debt problem before it causes a financial train wreck. But with economists predicting a fall in GDP and over 700,000 jobs lost in the fourth quarter of 2024, maybe he should edit his train analogy to a plane crash.
The disputed issue is part of politics as usual, except it’s not so funny when it threatens the economic stability of a country. We’re talking about a potential repeat of the 2011 fiscal crisis that caused a downgrade in the United States’ credit rating, costing taxpayers $1.3 billion. The Dow Jones plummeted by 2,000 points, and the financial system was in chaos. So, Republicans may want to start taking this more seriously because I’m not sure the stock traders on Wall Street will be buying tickets to their comedy show if the economy tanks.
Serious News: washingtonpost
