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There’s Going to Be A Global Financial Crisis in 2023

Nuclear Blast
November 4, 2022 10:02 a.m.
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In several recent posts I’ve told you that most of the near-term (pre-2024) dangers of a GOP House majority are manageable. I don’t mean “no big deal.” It’s disaster after disaster. But I mean manageable in the sense of things the country can get through. With one exception: a debt-limit hostage-taking stand-off in 2023 in which House Republicans force the first U.S. debt default in U.S. history. Regardless of the outcome of Tuesday’s election it will be within Democrats’ power to prevent this crisis in advance by settling the debt limit issue during the lame duck session of Congress. Whatever the political complexities, it is straightforward as a technical matter. Pass a bill in the House raising the debt limit high enough to take the issue off the table for years to come. Then take one of the remaining “reconciliation vehicles” on the Senate side and pass the law with 50 votes. Done and done.

But here’s the thing. We had a great TPM virtual event last night with two of the most knowledgable people about the U.S. senate, Adam Jentleson and Steve Clemons. Both agreed that there’s virtually no chance Democrats are going to do this.

Why? The biggest part is probably SenateBrain, the mix of obliviousness and collective action problems that form the main reason Democratic senators never got it together on a Roe pledge. Jentleson also thinks there are at least a few Democratic senators who think, well … it’s bad but maybe it will be an opportunity for a grand bargain on “entitlement reform” and managing the federal debt.

Needless to say, this is disappointing, distressing, virtually unbelievable. But I will tell you this: these two are the ones who I trust to tell me what is actually going to happen on these issues.

So I think they are right.

What does that mean? The demand from House Republicans will likely be some combination of “Repeal all the stuff you passed in 2021 and 2022” or “Cut Social Security and Medicare” or we force a U.S. debt default. Adam thinks that faced with this cataclysm Democrats, albeit kicking and screaming, will feel compelled to relent because the consequences of default are that bad. For the elected officials, especially on the Senate side, that may well be true. But I have a different read on those elected officials’ constituents. I think there is less than zero appetite among Democrats for even entertaining the idea of such a negotiation. I think any move in this direction will spur a rebellion among Democrats nationwide. This is why I think the country will go into default. Because House Republicans are entirely ready to shoot the hostage. Indeed, there is a portion of the GOP House caucus that is not only entirely willing to take that step but is eager to do so.

So there are the options: debt default or a decision to lock in major cuts to Social Security and Medicare for the rest of the century. As I said, Democrats could solve this problem in advance in November or December. But Adam and Steve say they won’t.

We’ll be publishing the video of the entire event. But here’s the ten minutes or so where we have the part of the discussion I’m referencing.

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