First came the headline that House Republicans were planning to offer a “deal” to extend the debt ceiling limits for six weeks in exchange for “fresh negotiations.” But that’s not all.
Then came the poison pill: The latest GOP proposal includes a permanent ban on the Treasury department using any kind of “emergency” measures to stave off default in the future.
Shorter GOP: Promise not to save them, and we’ll kill the hostages at Christmas. Ho ho ho!
The House Republican plan to extend the debt ceiling for six weeks would permanently ban the Treasury Department from using extraordinary measures to avoid default, congressional aides said.
The provision would ban practices, used by Democratic and Republican administrations for decades, which have effectively allowed the Treasury to limit investments in pensions and other funds when the government bumps up against its borrowing limit. These steps have extended the time that Treasury can continue borrowing and paying the nation’s bills while Congress debates terms for raising the debt ceiling.
Even though the steps are called “emergency” measures, they have become employed so routinely during recent fiscal standoffs that Congress often waits for the emergency steps to be exhausted before beginning negotiations on raising the borrowing limit.
For example, last May 2011, we were about to hit the debt ceiling at current spending levels (even including the cuts in place at the time). So the Treasury department did what it’s done in the past whenever the debt ceiling looked like it was coming on: First it stops discretionary spending. Companies sub-contracting to the government have their payments delayed. Then it delays pension contributions and so on. Bond sales might be rescheduled. By doing this, the U.S. didn’t default at the end of May 2011, but instead was able to limp along until August — the last time the GOP took their debt-default hostages.
This time, it also began in May 2013, but the gov’t was able to hang on longer because the deficit is smaller (yes, really) and revenues are higher. But again, if the Treasury department hadn’t acted, the default probably would’ve hit in June.
So now the demand is the hostages need to offer themselves up earlier and more willingly, and the cops need to promise not to attempt a rescue — in exchange for six more weeks of not being offed by the kidnappers.
What’s not known at this time is whether the White House and Senate Dems will go along with this. My guess is with the poison pill, they won’t.
They really can’t help themselves, can they?
Update: So far, the answer appears to be “No.” The President has been insisting that ending the government shutdown be part of any debt ceiling deal, even if it’s just temporary. And it’s also clear they won’t swallow the House GOP’s demand the Treasury be completely dis-empowered to deal with budget crises in the future, although they may compromise on some details.