The 'debt ceiling' is made up. So why is it making our heads hurt?
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The debt ceiling. What on earth? We don't understand. Let's call the accountants.
"In accounting, you have to reconcile," says Rep. Victoria Spartz (R-Ind.), one of maybe three sitting members of Congress who once worked as a certified public accountant. "Your debits and credits should equal. They don't here."
Boy, don't they.
"It's shocking," says Rep. Brad Sherman (D-Calif.), another former accountant in Congress. "We have Microsoft debt selling for 120 basis points - lower yield than Treasurys! Literally! I mean, 120 basis points is a lot!"
And this means . . .
This means, Sherman says, that an American corporation is more trusted to pay its bills in the next few months than America itself.
If he were still a CPA, would he advise a client to do business with the United States?
"Hell no!" Sherman says. "In business, you always have that retailer that ran into some cash-flow problems and didn't pay you in 30 days, but they paid you in 45, and you worked it out. But if you worked with someone who had the money and just said, 'I don't feel like paying?' Hahahahaha. No."
Congress is not run by accountants, alas. But it must account for the debt ceiling to avoid a catastrophic default in a matter of days. Members have been fighting, grandstanding, negotiating through the media, negotiating at the White House, reverting to stilted brinkmanship and abusing metaphors in search of the simplest way to describe the bureaucratic, extortive, purely voluntary, perfectly insane procedural paroxysm gripping Washington right now.
"A precipice," Rep. Bryan Steil (R-Wis.) said Wednesday.
"A manufactured crisis," said Rep. Brian Higgins (D-N.Y.).
"A perfect hostage situation," said Rep. Jim Himes (D-Conn.).
"Hostage" is the one-word refrain.
"At the end of the day, they're willing to shoot the hostage," Rep. Hakeem Jeffries (D-N.Y.) said about House Republicans, who are refusing to raise the debt ceiling unless spending is further slashed. (Never mind that there's no relationship between raising the ceiling - the amount of debt that Treasury can issue for money that's already allocated - and the GOP's demands, which would take effect in a future federal budget.)
"Shoot the hostage" sort of worked for Keanu Reeves in the 1994 movie "Speed," in which he pops his captive partner in the leg, causing the villain to scurry away. The injured partner recovers but later dies in an explosion rigged by the villain. So, on balance, not a wholly effective strategy. Actually, why not use "Speed" as a (dumb) metaphor for what's happening now in Washington? If the debt ceiling is not raised, then the nation can't issue Treasury bonds, then revenue drops below the proverbial 50 mph threshold, and then the bills aren't paid, and - boom. Goodbye, Sandra Bullock.
Anyway. America has always been in debt. It wasn't cheap to shake off the British Empire. By 1791, debt related to the Revolutionary War amounted to around $75.5 million. Around that time, Alexander Hamilton, the first secretary of the treasury, issued the first report on the public credit.
"The United States debt, foreign and domestic, was the price of liberty," Hamilton wrote. "The faith of America has been repeatedly pledged for it."
Key word: repeatedly. Prosecuting the Civil War? Building the Panama Canal? Invading and occupying Iraq and Afghanistan? Intubating the economy during the covid pandemic? All while giving tax cuts to the rich? Give me liberty, then give me debt! Now we have nearly $32 trillion of it.
On Monday, the current treasury secretary, Janet L. Yellen, wrote yet another letter of warning to Speaker of the House Kevin McCarthy (R-Calif.) that foresaw "severe hardship" if the debt ceiling were not lifted.
"I continue to urge Congress to protect the full faith and credit of the United States by acting as soon as possible," Yellen wrote.
Congress had a different speed in mind. Wednesday was a particularly feisty day on the Hill, as the House of Representatives butted up against both a holiday weekend and the "dangerous calamity" of default, as Democratic Whip Katherine M. Clark (Mass.) put it.
"The problem is not the White House," Rep. Pramila Jayapal (D-Wash.) said during a news conference with her liberal colleagues. "The problem is Kevin McCarthy."
"It's not my fault," McCarthy told reporters five separate times in 13 minutes, in Statuary Hall, before heading to the White House.
"It's all drama," says Spartz, the former accountant, "and they're going to come out at the end like heroes and say, 'We fixed it.' Fixed what?"
Over in the Capitol Visitor Center, retired schoolteacher Graham Hardy, a tourist from London, expressed astonishment at how America has bunched itself up against a symbolic ceiling.
"It's all to do with the election," Hardy said, "and it's all to do with how they want to get money . . . and concessions from the government to pay for rich people to get more money. This is what we see it as in the U.K." He fretted about whether the debt ceiling fight would trigger a global financial meltdown during his holiday: a drive from Fort Lauderdale, Fla., to Detroit in a convertible.
But back to the hostages and hostage-takers. Republicans "don't feel like we should negotiate with our hostage," Rep. Matt Gaetz (R-Fla.) told Semafor on Tuesday.
Is the hostage President Biden? When asked by The Washington Post to clarify, Gaetz laughed darkly as he crossed the Capitol lawn Wednesday around 4 p.m.
Is the hostage a woman from Chicago named Janet?
"I brought this picture because this is a hostage from my district," said Rep. Jan Schakowsky (D-Ill.), hauling a large photo of a constituent to the microphone during yet another news conference. "Her name is Janet, and she called my office in tears. She was so afraid. She is 64 years old. Her income is $1,200 a month. She has chronic mental illness. She cannot work. She would like to work, but she cannot. And she is so afraid that if they do what they're going to do, that she cannot pay the rent, she cannot pay for any food, she can't pay for the medication that she needs."
Schakowsky's poster of Janet said, "DON'T HOLD JANET HOSTAGE."
When reached by phone at her apartment in the Uptown neighborhood of Chicago, Janet wondered why the system was set up to produce scenarios like this.
"That would be the $64,000 question," she said. "Why is it arranged this way? Because I have no clue."
The answer has something to do with 1776 and Article 1, Section 8 of the U.S. Constitution, and the way in which Congress delegated debt management to Treasury in 1939 while maintaining a lever of control (the "ceiling"!) that is now more of an instrument of chaos.
Is this just the price of liberty?
We tried to find answers late last week by driving to the listed address of the Bureau of the Fiscal Service. This is an office within the Treasury Department that was created in 2012 - after the last serious debt ceiling crisis - "to account for and report the national debt." The location is a gargantuan white warehouse in Landover, Md., behind 15-foot fences topped with razor wire. We drove to an intercom at the locked gate and rang the buzzer. It trilled for two minutes before someone picked up.
"You don't have an appointment," the voice on the other end said.
"Is this the Bureau of the Fiscal Service?" we asked.
"Yes."
"Is there anyone here to talk to about the debt ceiling?"
"I just manage the building."
"So no one - "
"Too much information. You have to leave."
So we left.
On Thursday morning, with the "hostage" crisis unresolved, House members began to depart, too. They would cast their final votes, then climb into their black livery SUVs and head for the airport. There is no ceiling yet on their holiday weekend.
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