GOPs Write Their Own Debt Ceiling Adventure

WASHINGTON, DC - MARCH 10: House Freedom Caucus Chairman Rep. Scott Perry (R-PA) speaks during a news conference on the debt limit negotiations at the U.S. Capitol Building on March 10, 2023 in Washington, DC. Member... WASHINGTON, DC - MARCH 10: House Freedom Caucus Chairman Rep. Scott Perry (R-PA) speaks during a news conference on the debt limit negotiations at the U.S. Capitol Building on March 10, 2023 in Washington, DC. Members of the Freedom Caucus held the news conference to say they would consider voting to raise the debt ceiling in exchange for enacting legislation that would "shrink Washington" and bring government spending back to before 2020 and the Covid-19 Pandemic. (Photo by Anna Moneymaker/Getty Images) MORE LESS
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Over the last day or so, the D.C. insider sheets have had some interesting details about the GOP’s positioning and doubts about the debt-limit hostage-taking standoff. Senate Republicans especially are pushing to punt on the crisis for 30 days or so. Publicly, they’re siding with McCarthy and only a few have vaguely floated the idea. But for a lot of non-die-hards there’s clearly a mood of Can we take a time out? or Can we get a little more time to plan our hostage-crisis so you get blamed?

The White House obviously has little incentive to help Republicans out with their self-created crisis planning, though OMB Director Shalanda Young didn’t categorically rule it out.

But other Republicans have come up with a different way of extending the deadline: simply say the deadline is later. Two nights ago, Axios reported that many Republicans simply don’t believe the government will run out of money in early June.

“Nobody believes her. I don’t believe her,” said Sen. Kennedy, referring to Janet Yellen’s June estimate.

Many GOP lawmakers think they have until July or August.

Now it’s important to note that thinking the real cliff might be later than Yellen says isn’t some insane idea. I note this because Republicans think lots of insane things. But having some skepticism about this isn’t one of them.

Republicans think they’re getting the bum’s rush, getting jammed with a tighter deadline than anyone expected. Are they? Well, maybe a bit? It’s impossible to know precisely when the Treasury will run out of money. The White House would certainly have some incentive to interpret ambiguous data on the tighter rather than the looser side. Beyond political considerations, they also don’t want the U.S. government to default. That’s another reason to lean toward the sooner X date: If it might be June 1 or June 15, the former date is the one to focus on.

I say this not to suggest doubt in the apparent deadline but merely to note that it’s understandable Republicans are a bit skeptical. But given who Yellen is, the academic background, the Fed Chair background, I really doubt she’s seeing evidence that says Aug. 1 and is instead saying June 1. It’s not in the DNA. But Republicans convincing themselves otherwise adds a lot of unpredictability and danger to the process.

Side Note: You may be wondering: why it is that I’m constantly complaining about and criticizing these insider D.C. newsletters and also clearly reading them and quoting them? Well, if you peer through the “it’s normal for Republicans to be crazy so Democrats are responsible for picking up the pieces” prism, they’re filled with valuable information.

Now back to our story …

And there’s more!

Deadlines and predictions aside, lots of House Republicans simply don’t think default will be a big deal. As PunchBowl puts it, “There are plenty of House Republicans who don’t believe that default would be catastrophic.” They simply don’t think it’s the end of the world. If it has to happen to shake things up, so be it.

Here again, it’s worth saying, we can’t really know what will happen in a default scenario. There just isn’t much precedent for the sovereign behind a global reserve currency defaulting on its spending and/or debt obligations when it has every ability to service them. Put differently, there aren’t clear rules for a situation quite as absurd as this one. That said, it’s not much of a plan to go with “Who knows? It might not be quite as catastrophic as everyone expects.” There’s a real “Maybe none of the Russian nukes will even detonate” vibe.

The real point is that Republicans’ willingness to write their own adventure, live in their own bubble, make their own reality, adds a lot of uncertainty and danger to the equation. It also makes it critical that the White House and Joe Biden have not one but a number of tricks up their sleeve for when Republicans call their bluff. Because they look almost certain to do that. Republicans are not just willing to shoot their hostage. For many it’s too fun an opportunity to let slip by.

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