US took itself hostage with threat of default – 6/4/2023 – David Wiswell

In a last-second negotiation between the Democrat-led White House and the Republican-led House of Representatives over raising the US debt ceiling to avoid a catastrophic, self-imposed default, we nearly needed a spell from Harry’s Gryffindor house Potter to save us from our own stupidity. “Expelliarmus inadimplencius!”—the spell to avert a self-inflicted catastrophe or to rub reality in your face.

So let’s go over it: what devastation was at stake for the US and world economy? Why did this happen in the first place? And why is it likely to happen again??!!

A default would mean that: the US would go into recession; Americans collectively would lose $12 trillion; we would no longer be able to pay government agencies; pensions would be shaken; millions of people would lose jobs; more than a fifth of the country would lose access to medical care; US GDP would shrink by 7%; the world would lose confidence in the American economy; the impossibility of paying our bonds would wreak havoc on US markets; and since these bonds support the world economy, the effect would spill over into world markets. It would be the biggest voluntary disaster since Trump’s haircut.

Why is this happening in the richest country in the world? Well, Republicans have an agenda that with the current balance of power they can’t have, and that’s why their Speaker of the House, Kevin McCarthy, has been using that threat to convince Joe Biden to negotiate. It’s a bit like a bank robber pointing a gun at his own head and saying “put the money in the bag or this idiot will get shot”.

Biden held off negotiations until the last minute, hoping that McCarthy would relent, but he did not, and the deal was sealed with just two days to go before the scheduled default date. Ironically, the agreement was called the “Fiscal Responsibility Law”. Describing this event as being fiscally responsible is like labeling an initiative to set fire to people’s homes the “Home Heating Act”. It’s an exaggeration and that’s all.

Under the deal, $28 billion of unused Covid relief funds and $21 billion of Biden’s new budget will be returned to the IRS; about 275,000 older Americans receiving food stamps will have tougher work requirements; the measure will limit financial assistance to struggling families; it approves a pipeline through West Virginia and limits the president’s ability to spend without corresponding cuts.

Non-military spending will rise 1% in 2025, and military spending will also rise. Surprise! Even our cuts include military spending! We love firearms. We love phallic things that you keep in your pants and measure in millimeters. As does my wife!

Hardcore conservatives are unhappy that it doesn’t cut enough. We on the left are also unhappy, because it’s bad for the environment and poor families, it increases war spending, and it eliminates IRS funds needed to stop our millionaires and our corporations from dodging taxes (thus recouping their monies). This puts the entire burden on the poor, the victims of these new missiles and the already warming planet. “Domestic Heating Act” seems like a very apt name.

The final vote on the bill in the Senate came just a few days before this article goes to press (which is the officially scheduled default day; happy default day!), while I’m on vacation in the Caribbean! That’s why I’m hoping that a country will still exist when I return and also that I won’t be held hostage, like the national debt, by… Dominican republicans.

Why can this happen again? Well, Republicans did that on another occasion when Biden was Obama’s vice president. The mere fact of negotiating gives credibility to this insane tactic, and this agreement only extends the debt limit until 2025. In less than two years this could happen again. I’m already seeing some ominous omens from the fact that the debt is at $31.4 trillion, as all you have to do is change the place of the comma and the number becomes 3.14 (or Pi), which, unfortunately, also repeats itself forever .

Translated by Clara Allain

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