Barely Speaker Kevin McCarthy responded to President Joe Biden’s 2024 budget on Thursday, calling it “completely unserious” because it would raise taxes on the wealthy. Not that McCarthy explains that part. He says Biden “proposes trillions in new taxes that you and your family will pay directly or through higher costs.” Maybe he just knows his audience really well—people who make more than $400,000 a year and corporations.
Meanwhile, there is still no budget proposal from McCarthy and team. Instead of working on a budget proposal that wouldn’t be laughed out of the Senate chamber, the House GOP is trying to do a thing that the Department of Treasury says can’t be done, and something that will strike terror in the hearts of economists and the markets: They are plotting to allow the nation to default on its debt and prioritize payments once the debt ceiling is breached.
This has been discussed before, back in 2011 and 2013 when Republicans were threatening to default under the last Democratic president, Barack Obama. Jack Lew, the Treasury Secretary at the time, tried to explain to Republicans that it couldn’t just juggle the bills that way. He called prioritization “default by another name … I don’t believe there is a way to pick and choose on a broad basis,” he said of the Treasury’s automated payment systems. “This system was not designed to be turned off selectively.”
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They don’t have to trust a former Democratic official. They could ask a fellow Republican. Brian Riedl, an economist at the right-leaning Manhattan Institute, was a staffer for GOP Sen. Rob Portman during those fights, and studied the idea in depth. He told Semafor that the Treasury simply doesn’t have the physical capacity to do this.
“They receive millions of invoices every week to produce millions of payments and they’re generally paid sequentially and they can’t be categorized very easily into Social Security gets paid, [Temporary Assistance for Needy Families] doesn’t get paid,” Riedl said. “They’re just not programmed to do that.”
The revenue coming into the Treasury is also sporadic, so setting a schedule for paying prioritized debts isn’t feasible. That would lead, Reid believes, to Treasury hanging onto cash reserves to make sure that it paid bondholders on schedule, potentially ignoring other obligations. Like Social Security checks. Or paying the troops. That sets up a political vulnerability for the GOP, he says.
“Chinese bondholders get paid before school lunches. Chinese bondholders get paid before border security,” Riedl said. “The attack ads write themselves.”
Which is exactly what the White House said in response to the House GOP moving forward with this hare-brained scheme. Spokesman Michael Kikukawa said in a statement that it puts “wealthy, foreign bondholders—including billionaires and banks in China—over working Americans.”
“The only way to avoid this kind of economic disaster is for Congress to do its job and prevent default. Not to put forward half-baked schemes that hurt the American people,” he said.
So how’s unserious now, Kev? And where’s your budget?
Markos and Kerry luxuriate in the battle going on between Donald Trump’s ascending fascism and Mitch McConnell’s disappearing neocon establishment. The fighting has become much sharper recently as the MAGA-media outlet Fox News has traveled further and further away from reality.
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