Pres Biden is right: MAGA wants to cause a debt ceiling default to help Trump
MAGA wants a recession
President Biden on Sunday morning shared the truth that I’m sure he has long understood when it comes to MAGA and the debt ceiling talks. That truth is MAGA House Republicans would gleefully cause a financial catastrophe to our nation because they believe it helps their beloved Donald Trump win in 2024.
Biden was not ambiguous with this message Sunday at the G7 Summit, declaring: “I think there are some MAGA Republicans in the House who know the damage it would do to the economy, and because I am president, and a president is responsible for everything, Biden would take the blame,” adding, “That’s the one way to make sure Biden’s not reelected.”
This is a far cry from earlier in the week when Biden declared, “I’m confident that we will get an agreement on the budget,” adding that the GOP negotiators were acting in “good faith.”
What happened in between those two statements is that House GOP negotiators are obviously feeling pressure from two extreme forces. First, there is Donald Trump--who has openly endorsed causing a default. And second, from the far right, Trump loving House Freedom Caucus members who demanded on Thursday that GOP leader Kevin McCarthy stop negotiating with Biden.
Here is the stark reality: Even a brief debt ceiling breach of about one week would slash 1.5 million jobs, raising the unemployment rate from 3.4 percent to 5 percent per a Moody's Analytics report. Working class Americans would be hurt the most by layoffs and the expected spikes in interest rates for credit cards, car loans and mortgages. And not only would our stock market crash but the world financial markets would see huge drops.
An extended breach of roughly two months would cause a massive wave of unemployment, cutting nearly 8 million jobs and doubling the unemployment rate to 7.8 percent, the report said. "The economic downturn that would ensue would be comparable to that suffered during the global financial crisis," Moody's Analytics warned if such a prolonged debt ceiling breach occurred.
The specter of this economic calamity is in large part why a recent CBS poll found 70 percent of Americans support raising the debt ceiling to avoid a default. Our fellow Americans understand the economic pain we would all feel if there is a default.
But that is what Trump and MAGA want because Biden has ushered in a very strong economy. Biden created a record number of jobs, as backed up the remarkable unemployment rate of only 3.4 percent—the lowest since 1969. Add to that, Black unemployment hit a new all-time low in April—with Hispanic unemployment way down as well. Inflation is coming down while wages continue to increase. MAGA gets that typically the number one issue impacting a president’s re-election is the economy, meaning they absolutely have to tank it.
The GOP tried this same playbook in 2011—a year before President Obama would be on the ballot seeking re-election. Like today, the GOP controlled the House while the Senate and White House were in the hands of Democrats. The GOP then forced a near breach of the debt ceiling—only agreeing to a deal 72 hours before the deadline.
The impact was that stock prices plunged and did not recover for half a year. In part due to the brinksmanship involved, the credit rating agency S&P downgraded our nation’s credit rating for the first time in US history, signaling to potential buyers that taking on US debt wasn’t as safe as it once was. In turn, borrowing costs for the United States skyrocketed by $1.3 billion dollars.
If the GOP hoped a near debt ceiling breach would cause Obama to lose in 2012, they were obviously mistaken. That means the lesson to MAGA—given their extremism—is not to bring the nation to the brink of default, but to actually cause one. This explains Trump’s comments last week telling House GOP leaders that unless Democrats give in to all your demands then “you’re going to have to do a default.”
This brings us to another issue related issue to this dispute that hurts Biden and Democrats: The corporate media’s failure to properly cover the GOP’s debt ceiling position. Article after article makes it seem that the House GOP would agree to a debt ceiling increase if Biden would simply agree to additional work requirements for certain programs. We see it with headlines like, Time’s “Biden Signals He May Cave to GOP on Some Work Requirements in Debt Ceiling Bill” and the AP’s “New work requirements for federal aid? GOP pushes proposals in debt talks.”
True, the House GOP is pushing to impose new or expanded work requirements for three federal programs: Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, Temporary Assistance for Needy Families and Medicaid assistance for adults without dependents.
But this is tiny part of what the House GOP is demanding in exchange for raising the debt ceiling as laid out in the bill they approved last month. The House GOP’s plan would block Biden’s plan to grant student loan forgiveness as well as roll back his climate change initiatives, such as repealing green energy tax credits while at same time expediting new oil drilling projects. The measure would also give Congress more power to halt regulations from the executive branch and rescind funding enacted to respond to the Covid-19 pandemic. Plus it calls for massive cuts to domestic programs such as federal health care, education, science and labor programs, while sparing defense.
There is no way Biden should ever agree to these conditions. Raising the debt ceiling—mandated since 1917 by Congress-is about paying past debts, not about future spending, The issues the GOP seeks to discuss should be part of budget talks—and they know it.
Biden signaled Sunday an openness to invoke Section 4 of the 14th Amendment to allow the Treasury to borrow above the debt ceiling to pay nation’s outstanding debts. (I’ll address this more in my next article.) But I will note that the provision of the 14th Amendment that guarantees our nation’s debts was enacted after the Civil War to ensure the ex-Confederate states to honor the Union’s Civil War debts. Today, it’s in essence the same former Confederate state’s reps threatening to destroy our economy.
We know that the MAGA wing of the GOP—from Trump down—want a default. These are the same people who attempted a coup and incited the Jan 6 attack. They literally sought to end our democratic Republic by keeping Trump in office despite losing the 2020 election. They don’t care about the pain a default will cause, they only care about power. And causing a recession or worse is what they believe is needed to win in 2024.
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