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‘Normalize’ doomsday? Dems lambaste GOP’s latest debt-limit gambit

While Republican supporters of Bill the measure as a way To reduce the backlash, Democratic leaders argue that even debating it fuels a risky and dishonest theory that it’s possible to avert irreparable economic damage without raising the debt ceiling. However, as GOP lawmakers keep talking about it, Democrats are happy to take advantage of the convoluted proposal’s tricky politics.

“As a Democrat, I’m actually looking forward to them voting to put foreign investors ahead of American families when it comes to paying,” said the chair of the Senate Budget Committee Sheldon Whitehouse (DR.I.). “I’m not sure if that’s the message they want to get out there in 2024, but God bless them if they do.”

The reality that the GOP law would prioritize foreign obligations over domestic bills, from military pay to food stamps, might seem like a political gift to Democrats. But President Joe Biden’s party is also concerned about the effort for a stranger reason, warning that it is a ploy to make the public more comfortable pushing the country to the limit of debt for the first time in history and even to lead beyond.

And Democrats say their opponents’ stance this summer could portend economic troubles as investors gauge Congress’ risk appetite.

“They invent an imaginary world where the debt limit has been exceeded and there is no catastrophe,” Whitehouse said. “This bill normalizes that. I think it’s a very dangerous thing.”

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The House bill now awaits a ground lawsuit, having received committee approval from the chamber’s tax committee earlier this month. A vote isn’t planned, but McCarthy promised it would have a say as part of his list of January commitments to cement his leadership post.

Proponents of the bill are now seeking the same kind of last-minute and behind-closed-door concessions on the debt limit, Whitehouse said, accusing Republicans of using the issue as a “hand grenade” to “force Biden into a back room where they can.” Doing business without the public knowing what they want.”

GOP leaders have added more exemptions to their plan, giving the Biden administration the power to grant Social Security and Medicare benefits by borrowing beyond the debt limit.

“I’m actually surprised my colleagues on the other side don’t support this legislation,” says the chair of the House Ways and Means Committee JasonSmith (R-Mo.) said before his panel approved the measure this month. “Finally, the bill says we will never default on our debt and seniors will always be protected.”

Under the bill, Treasury Secretary Janet Yellen would have to prioritize payments to the Pentagon and veterans. But the secretary could not borrow extra money for it. Payments for items such as government travel and legislators’ salaries would come last.

Yellen and many finance ministers before her have said government systems are incapable of operating an elaborate prioritization scheme and that it is logistically impossible to match millions of federal treasury payments every day. Also, opponents of the bill say that freezing payments on state contractors, the entire federal workforce, retirees on federally-supported pensions, state and local governments — and everything else besides Social Security, Medicare, and US debtholders — would be economically catastrophic on its own.

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But arguments that the bill won’t become law and wouldn’t work anyway are slim, Democrats say, compared to the main point: the message it sends to the public.

“It’s acknowledging that being out is okay, which is absolutely ridiculous and dangerous,” Sen said. Ben Cardin (D-Md.), Chair of the Small Business Committee.

“If we don’t pay our bills to anyone on time, that’s default,” Cardin added. “The cost of borrowing in the United States is going up immediately. Our bond ratings are changing. It’s a disastrous course.”

Of course, the Democrats’ doomsday predictions are playing in their favor in the debt ceiling negotiations. Historically, whenever the two parties discussed a remedy by the deadline, the two parties have reached a last-minute bipartisan agreement to avert economic chaos as Wall Street investors grew increasingly nervous.

“A responsible President would stand up and say that under no circumstances will the United States default on its debt. Biden doesn’t want to say that because he wants to scare markets by threatening to default,” Sen said. ted cruz (R-Texas).

Over the past decade, Cruz has remained an outsider as his GOP peers have repeatedly helped Democrats raise the debt limit at the last minute, stumbling the most fiscally conservative lawmakers in both chambers who were unwilling to do business complete until their demands are met.

In 2013, while he was a first-term senator, the Texan insisted that Obamacare be defunded as a condition of raising the nation’s credit limits. This demand led to a 16-day government shutdown and within a day, the country defaulted on its payments.

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Now, Cruz argues that House Republicans’ bill to limit the impact of a default would ensure Democrats can’t use fears of economic catastrophe to avoid negotiating fiscal changes.

“So far, Democrats have resisted this because they would rather create fear than actually reach a sensible compromise on spending and debt,” Cruz said.

The Republican move looks all too familiar to lawmakers who were there some 12 years ago, when the debt ceiling led to a US credit rating downgrade for the first time in American history. Republicans also advocated debt prioritization legislation at the time.

“What we’re seeing is a throwback to 2011 on steroids,” said Sen. Chris van Hollen (D-Md.), who was a member of the house at the time. “They really need to pull themselves back from the brink because they will crush the American economy if they stay on this path.”

The US could fully utilize its borrowing power in less than three months, as early as June if earnings come in lower than usual this fiscal season. At best, the Treasury will be able to get through the summer and possibly into the fall using what the government calls “extraordinary measures” cash-saving tactics.

“No one knows exactly how long the extraordinary measures will last. Well, what if it doesn’t take that long?” said a Republican lawmaker, speaking on condition of anonymity to avoid being linked to concerns about late payments.

“I don’t think we should mess with that.”

Olivia Beavers and Caitlin Emma contributed to this report.

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