House Passes Short-Term Debt Ceiling Increase, Postponing Potential Crisis to December
Any minute now, the House is set to approve a bill that temporarily raises the debt ceiling, enabling the U.S. Treasury to keep meeting U.S. obligations until at least early December.
The bill raises the debt ceiling by $480 billion. While some analysts say the increase will extend the Treasury’s potential default date to December 3, others think the fiscal cushion could last longer. The research firm Wrightson ICAP on Tuesday estimated that the increase will be enough to provide the Treasury with sufficient resources “until some point between mid-December and early January,” suggesting that Congress will have about two months to defuse the next debt ceiling crisis, on either a short- or long-term basis.
Lawmakers did not vote directly on the debt ceiling bill, which the Senate passed last week. Instead, the House will “deem” the bill to have passed as part of the debate over a package of legislation that includes the PUMP for Nursing Mothers Act, the Protect Older Job Applicants Act and the Family Violence Prevention and Services Improvement Act.
Critics charged that Democrats did not vote directly on the bill in order to avoid taking public responsibility for the increase. Rep. Tom Cole (R-OK) said Democrats were playing “a game of smoke and mirrors so they don’t have to be on the record about substantive items.”
Time for new rules? House Budget Committee Chairman John Yarmuth (D-KY) and Rep. Brendan Boyle (D-PA) introduced a bill two weeks ago that would give the Treasury Secretary the authority to raise the debt ceiling, and at a press conference Tuesday, House Speaker Nancy Pelosi (D-CA) spoke approvingly of the proposal.
“That seems to have some appeal on both sides of the aisle, because of the consequences to people of not lifting it,” Pelosi said. “I think it has merit.”
In a press release when the proposal was released, Boyle said the debt ceiling is no longer necessary or productive. “It’s quite clear that this measure, which was first introduced in 1917, has outlived its effectiveness,” he said. “Simply put, the debt ceiling is incapable of accomplishing what it sets out to do—to control how much the government borrows—as the bills Congress passes are legally binding and cannot be inhibited by such a limit.”
The bill would require 60 votes in the Senate, however, and has little chance of becoming law in the current Congress.
Editorial of the Day: ‘Fearmongering’ and ‘Cowardice’ on the Debt Limit
The New York Times Editorial Board on Saturday excoriated both Republicans and Democrats for playing with fire by repeatedly engaging in debt ceiling brinkmanship — and for reaching a deal last week that may only set up another round of risky political maneuvering. Tuesday’s House vote may mean the issue is off the front burner for now, but the Times — like many others — argues forcefully that the debt ceiling serves no useful purpose:
“In 2019, the last time Congress played with fire before finally raising the ceiling, this board wrote
that ‘anything short of eliminating the ceiling is legislative malpractice at public expense.’ These past few weeks of completely unnecessary brinkmanship have only served to strengthen that judgment.
“Policymaking in the United States has been reduced to grappling with whatever crisis looms largest. On questions of public spending, as in other areas, like public health, the nation’s leaders seem to have lost the ability to make the kinds of decisions necessary to avert future crises. The deal reached this week doesn’t resolve anything.”
On the GOP side:
“Senate Republicans are quite simply engaged in economic sabotage. Under Democratic presidents, they routinely obstruct the process of raising the debt ceiling for no apparent purpose other than fearmongering.
“They also misrepresent the nature of the ceiling, perhaps because it would otherwise be untenable to defend their behavior.”
And the Democrats:
“Democrats, by contrast, are guilty of cowardice. They are ready to raise the ceiling, but most are not willing to get rid of it. … A few Senate Democrats have taken public stands, but not enough to avoid a repeat of this sad circus when the United States approaches the new debt ceiling in the coming months.
“One justification quietly expressed by Democrats is the fear that if they voted to eliminate the debt ceiling, Republicans would portray them as fiscally irresponsible. Yet to avoid that risk, they are being fiscally irresponsible.”
Read the full editorial at The New York Times.
Record Revenues for Federal Government in 2021
As we told you last week, the Congressional Budget Office on Friday estimated that the deficit for the 2021 fiscal year will come to $2.8 trillion, the second largest annual deficit in history. At the same time, federal revenues saw an 18% increase from the year before, rising to $627 billion, for a total of more than $4 trillion. According to Politico’s Brian Faler, that increase is the largest one-year jump going back 44 years, to 1977. And it’s the first time revenues have topped $4 trillion.
Revenues “are just booming,” Mark Booth, a former CBO official, told Politico. “It is very unusual.”
All types of taxes recorded increased receipts, with corporate taxes seeing the biggest jump, 75%. Corporate taxes totaled an estimated $370 billion — higher than where they stood before the Republican tax cuts took effect in 2018 and the highest in nominal terms since 2007, Faler notes.
Poll of the Day: Big Support for Drug Price Negotiation Power
Most Americans say they want the government to have the power to negotiate drug prices, according to a new poll from the Kaiser Family Foundation. The survey found that 83% of respondents favor “allowing the federal government to negotiate with drug companies to get a lower price on prescription drugs for people with Medicare and private insurance.” The total includes 95% of Democrats, 82% of independents and 71% of Republicans.
Most respondents were also skeptical about the pharmaceutical industry’s claim that it needs large profits to fund research for new drugs. A majority from all parties agreed that “even if U.S. prices were lower, drug companies would still make enough money to invest in the research needed to develop new drugs.”
House Budget Chair Yarmuth Says He Won’t Seek Re-Election
Rep. John Yarmuth, the Kentucky Democrat who chairs the House Budget Committee, announced Tuesday that he won’t seek re-election next year.
The 73-year-old Yarmuth was first elected to the House in 2006. He has played a major role in crafting Democrats’ coronavirus relief legislation and the larger package of social and climate programs currently being developed.
“While I have just become a lame duck, I intend to spend the next 15 months working hard to build on my proudest moment, the passage of the American Rescue Plan, which I authored and managed through the Congress,” he said.
In a statement, Pelosi praised Yarmuth as a “fierce and extraordinarily effective champion” for Americans’ health and financial security. “When Chairman Yarmuth retires at the end of his term, the Congress will lose a greatly respected Member and our Caucus will lose a friend whose wise counsel, expertise, humor and warmth is cherished,” she said.
Yarmuth, the only Democrat in Kentucky’s congressional delegation, represents a safely blue district that Politico reports is likely to avoid redistricting: “The retirement is especially notable because state Republicans in Frankfurt have been open about their plans to keep his Louisville district largely intact — rather than cracking it up to secure another GOP district.”
- Is the Race to the Bottom Over? – Peter Coy, New York Times
- A Build Back Better Bill All Democrats Can Get Behind – Ben Ritz, Washington Post
- Washington Should Quit Its Budget Gimmicks – Steven Rattner, New York Times
- Democrats Should Save Some Build Back Better Goodies for 2022 – Ed Kilgore, New York
- Democrats Negotiate Over Whether to Shoot Themselves in the Foot – Paul Waldman, Washington Post
- The Rich Have Found Another Way to Pay Less Tax – David Wessel, New York Times
- Democrats, You’re in Danger – Charles M. Blow, New York Times
- Doing Economics as if Evidence Matters – Paul Krugman, New York Times
- The GOP’s Ideology Doesn’t Match Economic Reality. Just Ask One of This Year’s Nobel Prize Winners. – Jennifer Rubin, Washington Post
- Can Manchin and Sinema Save All 50 U.S. States? – Daniel Henninger, Wall Street Journal
- There Is Shadow Inflation Taking Place All Around Us – Neil Irwin, New York Times
- Why Is the Biden Administration Seeking to Make Banks a Tool of the IRS? – Thomas Hoenig and Brian Knight, The Hill
- The Delta Wave Is Subsiding but Deaths Are Still High – Rachel Roubein, Washington Post
- To Prevent the Next Pandemic, We Must Find the Source of Covid-19. China’s Stonewalling Is Unacceptable. – Washington Post Editorial Board
- The Hospital Occupation That Changed Public Health Care – Emma Francis-Snyder, New York Times