Biden and McCarthy play chicken with the U.S. economy

President Joe Biden and Speaker of the House Kevin McCarthy are playing chicken with an increase in the debt ceiling. This increase is necessary to authorize the payment of bills the government has already incurred.

McCarthy wants to force Biden and the Democrats to make spending concessions, mostly in social programs, something the GOP did not ask for any of the three times the GOP led debt ceiling increases under President Trump.

President Biden has made it clear that he wants a simple debt ceiling increase with no demands.

Even if McCarthy can get all of the GOP’s slim majority in the House to push through a bill, something he’s struggling to do, the bill is unlikely to pass in the Senate. The Democrats have a small majority in the Senate. Republicans would need several Democrats to push back against Biden to get the bill in front of the president.

Several members of the Republican majority are holding out in the House because the bill, as proposed, would take money from their districts, likely making them very unpopular during the next election.

No Democrats have come out in favor of the bill, with many pointing to the hypocrisy of GOP demands and to the 2017 Trump-era tax cuts that added massively to current debt.

There is no talk among Republicans about reversing any of those tax cuts.

Based on how the tax cut bill was written, taxes for middle and lower-income Americans will increase over the next few years, while taxes on the wealthy are permanently lower. Most economists believe the tax cuts are responsible for about $2 trillion in additional debt and didn't spark the massive economic growth they were predicted to create.

If Congress and the President can’t come to some agreement by the time the government runs out of money, there could be a partial or total shutdown of the government.

A shutdown is generally seen as having few benefits other than scoring political points. During a recent shutdown, U.S. government bonds were downgraded, deemed less reliable than the gold standard they are generally held at. “Essential” employees are paid back pay once Congress decides to pass the debt ceiling, though many will be forced to work without pay. Furloughed employees are paid back pay when they return to work, ultimately making a shutdown simply a delay in expenses, not actually a savings for the government.

Congress continues to be paid during a shutdown.

At this time, it’s not clear when a shutdown might occur, as the precise date is calculated based on actual spending, but current estimates say some time in the summer.

Bob Peryea
National Correspondent
The Kentucky Daily

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