The debt ceiling crisis has brought the difference between Biden Democrats and the modern Republican Party into sharp relief. The debt ceiling is not about future spending; future spending is debated when Congress takes up the budget. The debt ceiling is a curious holdover from the past, when Congress actually wanted to enable the government to be flexible in its borrowing rather than holding the financial reins too tightly. In the era of World War I, when the country needed to raise a lot of money fast, Congress stopped passing specific revenue measures and instead set a cap on how much money the government could borrow through all of the different instruments it used.
“The United States of America must always pay bills already incurred without gamesmanship, brinksmanship, or partisanship. House Democrats will oppose any effort to hold the economy hostage as part of any scheme by Extreme MAGA Republicans to jam its right-wing agenda down the throats of the American people.” Hakeem Jeffries
Well said, Rep. Jeffries! And thank you, Heather for your important link to the past.
Strange. It seems that cutting funding for the IRS is a recurring theme with repubs. They're really scared of an effective IRS that could afford to go after rich tax cheats. I'm really glad that Biden is out there drawing the contrast between his policies and chaos of the House repubs.
I'm hoping that this Dominion suit is just the beginning pull of a thread that unravels all this maga BS. Thank you for the history lesson Dr. Richardson.
Race driven politics and deficit spending stuff started during the Civil War. Federal debt grew. The debt markets financed our growth. The Federal Reserve was founded to provide stability and monetary policy and the market for government bonds came into being at that time as Salomon Brothers & Hutzler, one of 26 government bond dealers became “corresponding dealers” with wires to the Fed, working to create a fluid federal debt market that would allow US debt to trade freely. Monetization was the term used by Marcus Nadler of Money Marketeers to teach money supply management and debt markets and debt management at CCNY in a night course. Fiscal and monetary policies were introduced and debated. The Democrats favored FDR’s New Deal and Republicans tagged with The Crash and Herbert Hoover’s record offered fiscal restraint and taxes to match debt growth, while Democrats favored debt growth and FDR’s plan for fiscal stimulus. The public was not educated on such issues and the debate over debt was and is misconstrued. Rep. David Stockman offered his version of the truth and Pres. Reagan took him to the woodshed. Ignorance ruled. Nadler was ignored.
US federal debt is the US IOU that underlies world markets. The US dollar is the reserve currency that replaced gold when Chas. De Gaul forced the Fed and the markets to exchange his US debt for gold.
China wants to replace the dollar as the reserve currency used to trade for oil. Tax and spend Democrats are now threatened by Trump’s fiscal politics that cut taxes and balloon the deficit.
Democrats seek to finance with taxes. That is the only way to protect the American people and the dollar. Trump is financed by grifting and stealing from the people via political donations. Trump fears personal bankruptcy. His Ponzi schemes are fear driven and dependent upon public stupidity.
We will not default. Biden will force tax increases to fund the treasury. The Fed will monetize. Debt markets, over 95% of all markets in size, will fluctuate. The buying power of the dollar will continue to decline.
Biden’s latest analysis is correct. McCarthy is nuts.
Our next president will have to speak on these issues. Educating the public about debt management is essential. Rand Paul is hopelessly screwed up. Ultimately, fiscal responsibility will replace monetary policy. Our currency will remain the world’s reserve currency. We must elect the next president and congress that truthfully speaks of fiscal responsibility, monetary responsibility and tax policy.
Ronald Reagan’s “supply side” economics and was labeled Voodoo Economics by G. H. W. Bush. Bush caved to get elected and failed. W failed everywhere.
Trump lies and the GOP is the party of The Big Lie.
And racism underlies our politics.
Our economy is strong. The strongest. Fiscal policy must reflect reality. Biden is truthful. Our next president and Congress should work to ensure the dollar and do as Bill Clinton did. Not Ronald Reagan.
Our entitlements are mismanaged but essential. FDR saved us from communism. The Crash was frightening.
Our challenge will require courage by all. Lying is death to the economy.
Our political leaders are not strong on markets and fiscal or monetary policy. Hopefully the leadership vacuum will attract new people. New blood.
I will write again on this area.
"so long as the United States government embraces the supply side economics the Republicans have advanced since 1981"
"Supply Side Economics" is one of those obfuscatory phases, like "Citizen's United" or "Stop the Steal" from the Looking Glass dictionary of Geopese. Who is supplying what to whom?
What is sad and very frustrating, as Dr. Richardson makes clear, is that 150 years later it is the same people fighting very hard over the same issues. Who rules America? Are we a government of the people, by the people, and for the people? Or, do the people who have the money make the rules? When the rich take power they take everything. The government they want will protect their interests and their profits. Nothing more. Any government spending that makes life easier, healthier, safer, and more prosperous for 95% of the country is “socialism,” especially the program helps poor people, Black people, or women. It’s all for Clarence and his friends on the yacht.
Not to honor America's debts?
Not simple irresponsibility -- banditry.
But the bandits are stark raving mad. Time to intern K. McCarthy in an institution for the criminally insane.
"It would jeopardize the status of the U.S. dollar as the international reserve currency. Financial services firm Moody's Analytics warned that a default would cost up to 6 million jobs, create an unemployment rate of nearly 9%, and wipe out $15 trillion in household wealth."
We ought to be able to sue reckless and corrupt politicians for malpractice. There is a lot at stake here.
TFG is consistent if anything - he never was good for his debts.
The actions of the GOP are nothing more than economic terrorism. And we don't negotiate with terrorists.
I can't tell you how delighted I am that the Democrats led by Joe Biden are AT LAST getting back to the basics of Democratic politics, which is to represent working-class and middle-class people - the working people, in other words - and eschewing culture wars stuff, which is a trap that current-day conservatives set for progressives and the left generally to try and separate them from centrists (and not only in the USA).
What they were missing, and we have in abundance, is a propaganda machine that has been in a rebellion against our democracy for decades - with a singular purpose. Power. Democracy be damned. If the party that is suppressing votes and destroying democracy is lauded by half the country as the “real America,” what chance is there. Less than Hayes had. Sorry to be a downer, but in Texas, democracy is on the ropes…
How can one think that McCarthy, who owes his speakership to a small band of insurrectionist rogues, won’t drive the car off the cliff?
He has embraced the election deniers who tried on Jan. 6th to block a legitimate election.
This is the financial route to do what they couldn’t do constitutionally. Drive the economy into recession, undermine our financial position in the world, and point the finger at Biden.
I, for one, wouldn’t put it past them.
I'm always relieved when I find your letter in my email. I've finally learned to read it immediately, then again later in the day after others have commented, because you have so many readers whose sentiments and thoughts I agree with, but who express thdnselves so much better than I can. The community you have nutured gives me reassurance that the USA is still alive and kicking. Later....
Professor, I am so happy to have the strength to thank you for penning such an important letter. The origin of the “debt ceiling” and its subsequent perversion by Republicans is critical.
“ they want to destroy the government as it has existed since 1933, but since that government is actually quite popular, they cannot get the cuts they want by going through normal legislative procedures.”
Basically, the message is the same—they want to stop moving money from the richest to benefit the poorest. This view of America depends on seeing poor people (including children) as complicit in their poverty—believing that “if they weren’t so lazy, they wouldn’t need the help”. Then they fight to keep wages so low that the majority of the workers rely on the help to make ends meet. Finally, they so demonize the programs (except for Medicare and Social Security) that the people who depend on them are ashamed of using them and won’t fight for them. When was the last time that you saw marchers with signs saying “Don’t take away my food stamps!” ?
I don’t think DeSantis is going to run. His polling numbers are slipping, he now trails Trump by an average of 25 points. For a while, back in the late fall and early winter, Trump’s lead over DeSantis was shrinking. But since Trump’s indictment, his lead with the base has been growing and more Republican politicians are rallying to him. A solid 55% of the base is extremely loyal to Trump. Over 40 Republicans in Congress have endorsed Trump. 2 or 3 have endorsed DeSantis. DeSantis is not going to want to declare, and then get trounced. I think he’ll stay on the sidelines this go round.
This is good, for Biden. It’s bad, for Republicans. Trump and the Republican extremists continue to lose the support of moderates and independents. They’re likely to lose seats in Congress and the White House, if the MAGA wackos are the face of the party in 2024. https://fivethirtyeight.com/features/trump-desantis-national-polls/