Dem
51
GOP
49
The Senate is not populated with as many right-wing extremists as the House is. However, the upper chamber does have some fire-breathing right-wingers. Further, Senate Minority Leader Mitch McConnell (R-KY) used up a lot of political capital to get the omnibus spending bill through the Senate, while many other members took a lot of blowback from their constituents on the matter. Add it up, and the result is that as Speaker Kevin McCarthy (R-CA) wrestles with his colleagues over the debt ceiling, he's not going to get much help from the other end of the building. At the moment, the situation is something like this: "Kevin, it's up to you to come up with something that can get past your chamber, and then we'll take that bill up in our chamber."
To put a slightly finer point on it, several moderate Republican senators guess that, at the moment, there aren't 10 GOP votes in the Senate for a clean bill that would just raise the debt limit and do nothing else. So, even if the Democrats joined with a handful of non-whackadoodle House Republicans to pass something, that theoretically wouldn't get through the Senate. That would mean that only something tolerable to the MAGA crowd would give Senate Republicans enough political cover to confer their votes.
At least, that is the theory. Assuming an actual bill, even one from a Democratic-sane Republican fusion, actually got to the Senate, then it would be considerably harder for the Republican senators to let it die, since everyone in the country would know exactly who was to blame. Further, it's all good and well to do a bunch of posturing right now, and to turn the screws on McCarthy. The calculus changes a whole lot as the country gets closer and closer to the edge of the cliff.
Still, the Speaker looks like he'll get to spend several months twisting in the wind, while he tries (and probably fails) to herd cats. That said, in the end, it's nearly inconceivable that the U.S. will actually default on the debt limit. McConnell may be turtling up right now, but he's already said that a default is totally unacceptable. Once there's a bit more time for anger about the omnibus bill to dissipate, he'll be in a better position to twist some Republican arms. And if he can't or won't do it, there is really just no chance that Joe Biden decides that driving off the cliff and wrecking the economy is a better choice than one of the maneuvers at his disposal, like the trillion-dollar coin or invoking the Fourteenth Amendment.
And on that point, reader G.M. in Newton, MA, brings to our attention a potential scheme proposed by Matthew Yglesias. The idea is to increase the return on bonds to higher rates than market conditions currently dictate. That trick would theoretically make it possible to sell a bond with, say, a $100 face value for more than $100. So, the government would be able to bring in more money with the debt it issues.
We are not economists, as we have noted many times, so we don't feel particularly capable of evaluating this scheme. The U.S. has already reached the debt limit, of course, but presumably they are redeeming some securities, and so are able to issue others as that happens. Would that be enough to significantly alter the federal balance sheet? And would it be legal to sell bonds with these terms? And do future yields on bonds not count toward the debt tally (only the face value of the instruments)? We know enough to ask these questions, but we don't know enough to answer them. There are readers who know economics and markets better than we do, so if any of them would care to weigh in, we'll report back as to whether this scheme should be added to the list of potential options the Biden administration might pursue. (Z)