Three weeks to avoid default

Speaker McCarthy's best option might be one he can't say out loud.

Last week, I told you that we had six weeks until the federal government runs out of money and goes into default.

I was wrong.

The new estimate by the Treasury Department is that we have three weeks - and we still have not reached an agreement.

But:

A new path to resolving this opened up last week, and it’s a bit of a long shot, but it’s possible.

This new path has only worked a few times in the last 50 years. It’s rare and complicated and would involve at least five Republicans voting with all the Democrats.

Which is why it’s a long shot, but to be honest with you, at this point it’s starting to feel like all we have are long shots. 

So here it is:

Normally the Speaker has all the power over what comes to a vote and what doesn’t. If the Speaker doesn’t like a bill, it doesn’t move.

But there’s an escape hatch. It’s there so that if a majority of the House wants to vote on a bill but the Speaker doesn’t, the majority can force a vote. It’s called a discharge petition.

So the Democrats have initiated the escape hatch protocol for a bill that would raise the debt ceiling and avoid default.

But the Democrats are in the minority, by five votes. So for this to work, five Republicans would have to sign on.

And you can imagine what life would be like for those five Republicans were they to sign on. That would be a rough week for them inside their party - to put it mildly.

Of course, they would be strongly condemned by the Speaker. But here’s the crazy part of this whole scenario: My sense is that, in private, the Speaker would be incredibly relieved that they went around him.

It gets him off the hook. We don’t default and he gets to remain Speaker because he doesn’t have to do any compromise that would really upset his right flank, and it’s his right flank that holds the key to whether he gets to remain Speaker.

If it happens, I’m sure the Speaker will kick and scream - and then he’ll shut the door and thank his lucky stars.

There are 18 Republicans in the House who were elected in districts that Biden carried - which is to say, they were elected because of a handful of swing voters.

If you’re placing bets on who might support an effort like this, those 18 are probably your pool of candidates.

The bad news is that the only thing that makes this outcome even remotely possible is if we get to the last minute and nothing else has worked.

But the last minute is rapidly approaching. We’re only scheduled to be in session for 12 days between now and when they say we could default.  

For those who say you’ve heard all this before - debt ceiling, default, last second deals to avoid disaster - you’re right. You have. And we will probably figure this out. 

But given the severity of the consequences, the odds of default should be zero - and they are not. This is going to be a close call.

Here’s the debt situation

So much of the debt standoff right now is people describing various disaster scenarios.

It’d be a big help if we spent more time actually informing you about the underlying situation - that way, you can reach your own conclusions about which approach makes the most sense.

Here are some basic facts about our debt situation that you should know:

1. There is broad agreement in both parties that our fiscal path is unsustainable. We are taking on too much debt. If left unchecked, by the end of this decade we could spend more on interest on the debt than on defense. That’s bad.

2. We’re currently running roughly a 22% deficit. So for every dollar we spend, we’re borrowing about 22 cents. For a sense of scale, we could eliminate the entire military - zero it out completely - and it wouldn’t balance the budget. It would get us about 14 cents closer. (Spending on Ukraine so far = about 2 cents.)

3. Realistically, there is no way to reach fiscal sustainability through cuts alone. Let’s say we want to at least get somewhat close to balancing the budget, but we don’t want to cut Medicare, Social Security, or refuse to pay interest on current debt. That’s almost half the budget. So if we have to find 22% savings and we’re starting out by taking half the budget off the table, then the rest would have to be cut by about 44% - including defense and veteran health care. And if defense and veteran health care were also taken off the table, that means you’d have to almost zero out the entire rest of the budget: energy, transportation, Medicaid (which includes 40 million kids), education, environment, NASA, air traffic control, border control… Poof. Gone. And that isn’t going to happen. So the way you’ll know that there’s a serious, realistic conversation about the budget is that it will include a discussion about reduced spending and a discussion about revenue from our highest earners and largest corporations. There’s just no way to make the math work without including both.

4. Racking up debt is definitely bipartisan. Here’s the simple way to think of where most of it came from: two unfunded wars, two unfunded tax cuts, and two global recessions. And 25% of all total debt was accumulated under the previous president, for whom the debt ceiling was lifted three times. 

5. There is also broad consensus that, if we default, it takes every single problem our country has and makes it worse - starting with the debt, which would spike as we increased spending to offset the major recession caused by default.

Those are some basic points we should all know just to ground this conversation in set of common facts, which is always a good place to start when solving a complex problem.

Best,

Rep. Jeff Jackson (NC-14)

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