Tell the President and your Members of Congress: No Deals With Economic Terrorists!
Call BOTH of your Senators.
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Call Script
My name is __________. I am a constituent, and my zip code is _______. I am a member of Indivisible SF.
We support your firm opposition to Republicans wielding the debt-ceiling law to extort cuts to Social Security, Medicare, nutrition, housing, and health programs – cuts that they cannot achieve through the normal democratic process. Hold fast! Don't give in to political blackmail. Don't make deals with economic hostage-takers. Instead of caving in and appeasing MAGA extremists, we urge you play hardball:
Enforce the 14th Amendment by ignoring the debt-ceiling law rather than defaulting on payments.
Repeal, amend, or suspend Gingrich's 1995 debt-ceiling law.
Cut fraud, waste, and boondoggles from the Pentagon budget before cutting Social Security.
Replace current Treasury bonds with higher-yield premium bonds that bring in more from investors.
Mint trillion-dollar coins to create countervailing economic assets on the books.
Use a Discharge Petition to circumvent MAGA-controlled House committees and force a floor vote.
Background
Like other nations, the United States runs budget deficits—meaning it spends more than it brings in through taxes. To cover its shortfall, the government borrows money by selling bonds to investors who earn interest while their money is safely protected. Bonds are a form of debt owed to bond holders, so when Republicans wail and wring their hands over the "national debt," what they're really talking about are Treasury Bonds, which are often referred to as "T-Bills."
The current version of the debt-ceiling law dates back to a 1995 revision by Republican leader Newt Gingrich, who explicitly amended the previous version to cripple the Clinton presidency. The GOP then went on to ruthlessly use it against both Obama and Biden (though not, of course, ever against Bush II or Trump). The Gingrich debt-ceiling law and Republican claims are essentially scams based on lies and distortions:
Lie/Distortion #1: Government is the Problem. Ronald Reagon's quip has been weaponized as Republican dogma to justify their "Starve the Beast" agenda. Their goal is to shrink the federal government down to the military, border-patrol, and bedroom-police by gutting Social Security, Medicare, Medicaid, food stamps, and other social safety-net programs, while simultaneously eliminating health, safety, environmental, financial, and other forms of regulation.
Lie/Distortion #2: Government is just like a family or small business. Since families cannot consistently spend more than they earn without collapsing into bankruptcy, Republicans claim that neither can the federal government. But governments are NOT the same as a small business. For one thing, not only can government create (mint) new money but expand the money-supply to keep pace with a growing population and economy is one of a government's primary duties. Equating government practice with business practice is economic hokum, just like their claim that tax breaks and subsidies bestowed upon the already obscenely wealthy will trickle down to the rest of us.
Lie/Distortion #3: Debt is bad. Yes, too much debt can be destructive. But both government and we as individuals constructively use debt to invest in our future. We buy our cars, homes, and college educations with borrowed money. Governments borrow money to build roads and bridges, hospitals and schools, and homes and parks, to conduct medical research, to put out fires, to protect the environment, and so forth. As the economy grows, new wealth is created to pay off the debt.
Lie/Distortion #4: The federal government is drowning in debt. Individual debt is measured against income. Millionaires who owe $1,000 on their credit cards have no problem, but for a minimum-wage earner that amount of debt is a burden. Government debt is measured against the economy—the Gross Domestic Product (GDP). From 2010–2019, U.S. national debt was around 100 percent of GDP, which was a bit higher than average for industrialized nations—primarily because of our enormous defense spending. Then in 2020 Trump's huge tax cuts for the rich and emergency spending for the Covid pandemic temporarily jacked our debt/GDP ratio up to 128 percent. Since President Biden took office, this ratio has begun to fall back towards normal—a process that would be accelerated by halting big defense increases and forcing the wealthy to pay their fair share of taxes.
Lie/Distortion #5: Refusing to raise the debt ceiling reins in future spending. Increasing the debt ceiling to prevent default does nothing to encourage new spending. It simply allows the government to pay for legislation that Congress has already enacted and already funded.
Lie/Distortion #6: Republicans are trying to "protect our children’s economic future." Say what? Republicans are protecting our kids future by cutting their retirement and health benefits? By blocking clean energy to stave off a climate disaster that our children will have to endure? By making it harder and far more expensive for our kids to get a college education? By gutting food stamps and school lunches? They're not protecting our children's economic future, they're laying the foundation for yet more tax cuts for the wealthy.
Lie/Distortion #7: Social Security is "going broke" and needs to be "saved" (by slashing benefits). At some point in the mid-2030s Social Security (SS) will run out of funds to continue paying full benefits to recipients and they will have to begin reducing payouts. The Republican solution is to cut benefits. But the root cause of the problem is that SS law rigs the system so that the very wealthy pay a lower percentage of their income in SS taxes than the rest of us. Under the Salary-Cap rule, all of us whose annual wages are less than $160,000 per year pay the same percentage as SS tax, but the 7 percent of Americans who earn more, pay lower percentages—so much so that CEOs with multi-million dollar salaries pay less than 1 percent. Under the Wages-Only rule, income from stock dividends, interest income, rents, business profits, and foreign investments are not subject to SS tax at all, yet these are major income streams for the obscenely wealthy. If just one of those rules was made fair and equal, Social Security would not run out of money. If both were made fair, SS benefits could be greatly expanded.
Lie/Distortion #8: Domestic safety-net programs are the cause of excessive deficits. The truth is that investments in our health, education, and opportunity grow the economy and reduce long-term deficits. So too do investments in infrastructure like bridges, hospitals, and schools. Yet some 60 percent of federal discretionary spending now goes to the military-industrial complex. Defense fraud, waste, abuse, and corporate boondoggles like the F-35 fighter jet do nothing to grow the economy. Nor does continuing to shower money on a Pentagon that has never, ever, passed a financial audit as they are required by law to do.
Lie/Distortion #9: Republicans piously proclaim that they're just patriots trying to protect the American people. But the nakedly partisan nature of their economic hostage-taking is clear. When the president is a Republican (Bush-I, Bush-II, Trump), or the Pentagon budget is up for discussion, the GOP "deficit hawks" never mention the national debt or engage in debt-ceiling blackmail. Only when Democrats are in the White House (Clinton, Obama, Biden) or domestic spending is on the table do they sound alarms over government spending or threaten to crash the economy if their hostage demands are not met.
There are at least six ways Dems can counter MAGA debt ceiling blackmail without giving in to their hostage demands—IF they summon the political courage to use them:
1. Enforce the 14th Amendment. The Constitution's 14th Amendment states, "The validity of the public debt of the United States, authorized by law, … shall not be questioned.” Congress has legally created and funded programs and appropriated funds to pay for them. The President is legally obligated to obey those laws. But one house of Congress intends to prevent the president from raising the money he needs to obey those previous laws. So one way or another, if the debt ceiling isn’t raised, Biden can’t avoid breaking at least some laws. Ignoring the scam debt ceiling may be the “least-unconstitutional” option.
2. Repeal, amend, or suspend Gingrich's 1995 debt-ceiling law. The best solution is to repeal, amend, or suspend Gingrich's debt-ceiling law. But that would require support from at least twelve Republicans in the House and nine Republicans in the Senate (plus the blessing of both Manchin and Sinema), so there's no real chance of it happening.
3. Cut fraud, waste, and boondoggles from the Pentagon budget before cutting Social Security. Our $858 defense budget is at a record-breaking high—it's MORE than the COMBINED military budgets of the next nine countries: China, India, Russia, United Kingdom, Saudi Arabia, Germany, France, Japan, and South Korea. In fact, the $80 billion increase from 2022 to 2023 alone is higher than the entire military budget of every nation in the world except China. By suspending funding for over-budget boondoggles like the F-35 and the unnecessary and dangerously destabilizing new generation of nuclear weapons, we can stave off hitting the debt ceiling. But the sad truth is that establishment Democrats are as responsible as Republicans for our enormous defense overspending.
4. Replace current bonds with premium bonds. If the Treasury offers bonds with a higher interest rate, they can be sold for more money to investors, but since the debt-ceiling law only counts a bond's "face value," they wouldn't officially increase the debt. In the short run, this would raise extra cash, and Wall Street would just love receiving higher interest on investments, but in the long run the higher interest payments would have a negative effect on national debt. In essence, this strategy is a financial gimmick, but so too is the entire Republican debt-ceiling scam. Countering a Republican gimmick with a Democratic gimmick is one way to fight back—and a far better method than paying off blackmailers
5. Trillion-Dollar Coins. The Treasury could legally mint platinum coins with trillion dollar face values, deposit them with the Federal Reserve, pay interest out of that account, and thus reduce total debt so that we stay below the ceiling. Republicans would correctly call this a trick or a gimmick, but so is their debt-ceiling blackmail scam. This maneuver has never been tried before, so it would require some hardball boldness, but better Democratic hardball than cuts to food stamps and school lunches.
6. Discharge Petition. If MAGA committee chairs bottle up a clean debt-ceiling bill in committee and prevent it from coming to the floor until their blackmail demands have been met, a discharge petition could be used to break it loose. But that would require the support of ten Republican House members (plus every Democrat), so the chances are slim.
While there are legitimate and valid arguments for or against each of the above six tactics, the past two decades have proven that there is no legitimate "short-term solution" argument for negotiating with economic hostage-takers because that just leads to more blackmail. But, as the old saying goes, You can't beat something with nothing. You can't just wring your hands and condemn evil. You have to try to do something to counter it.
References
Don’t Try to Appease Economic Terrorists, Paul Krugman, NY Times Jan. 19, 2023
Legislative Process 101: The Debt Ceiling, Indivisible
The case for a robust attack on the tax gap, U.S. Dept of Treasury, September 7, 2021
What is the national debt?, U.S. Dept of Treasury.
Debt to GDP Ratio by Country 2023, World Population Review
Debt limit options narrowing, 14th Amendment chatter returns, Roll Call, 9/20/21
The Name is Bond. Premium Bond. Mother Jones, 10/9/13
The Trillion-Dollar Coin Might Be the Least Bad Option, Annie Lowrey, The Atlantic, 1/24/23
Military Spending by Country 2023, World Population Review
You Can Let Republicans Destroy the Economy, or You Can Call Their Bluff, Jamelle Bouie, NY Times, 1/20/23
Please Don’t Feed the Debt Scolds, Paul Krugman, NY times, 1/23/23