The United States is less than a month away from driving headfirst over the proverbial fiscal cliff. Unless the Republican-controlled House of Representatives passes a bill to increase the debt limit that is also acceptable to the Democrat-controlled Senate and the White House, the United States will, for the first time in its history, default on its debt. That would provoke a catastrophe, likely plunging the U.S. into recession.
So the question on everyone’s mind is: Can this calamity be avoided? No … and yes.
Republicans and Democrats will almost certainly fail to craft a legislative compromise. Neither side wants to find agreement and even if one did, there is likely no deal that both sides could agree to. Instead, President Joe Biden must act unilaterally — perhaps by minting a $1 trillion platinum coin (unlikely) or choosing to simply ignore the debt limit and continue to borrow money (more likely). Whatever tactic he chooses, the burden will be on Biden to act — and ironically, all sides in Washington would benefit if he does.
Even if Biden did agree to haggle with Republicans, it’s hard to imagine that any kind of deal could be reached.
The crux of the debt limit dilemma is that House Republicans and the White House (with the support of congressional Democrats) have settled into two irreconcilable positions. Republicans are, in effect, holding the U.S. economy hostage by demanding that Biden agree to a host of poison pills — from massive spending cuts to repealing his signature legislation, the Inflation Reduction Act — before they agree to a debt limit increase.
At the other end of Pennsylvania Avenue, President Biden — chastened by memories of an ill-advised debt limit deal made by President Barack Obama with congressional Republicans in 2011 that slashed spending — is refusing to negotiate. He insists that House Republicans must pass a clean debt limit bill and save the haggling over spending for the annual budget talks. Biden’s…
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