The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

Tag: mitch mcconnell

McConnell Proves That ‘Bipartisan’ Filibuster Is A Fraud

Reprinted with permission from Alternet

Senate Minority Leader Mitch McConnell seems to be almost intentionally making a mockery of the small number of Democratic senators who continue to defend the filibuster.

Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona have vocally opposed any effort to change the chamber's rules that require 60 votes to proceed on most legislation. Many Democratic lawmakers and advocates have called for the filibuster to be abolished, which would make it easier for the party to enact various pillars of its agenda.

Read Now Show less

Wall Street Watches As Senate Haggles Over Debt Ceiling 'Truce'

(Reuters) - An apparent truce in the U.S. debt-ceiling standoff in Congress has offered some relief to Wall Street investors on edge about a possible debt default, but analysts are left assessing the risk of a repeat crisis as the year closes out.

The heads of major banks and financial institutions warned lawmakers of catastrophe if the debt ceiling was not raised before Oct. 18, the date the government expects to run out of cash, leading to a default on its debt.

A plan floated by U.S. Senate Republican Leader Mitch McConnell on Wednesday would extend the borrowing limit into December -- providing respite but no long-term solution.

"There will be many proposals, trial balloons and negotiations going on to resolve this issue," said S&P Global Ratings' lead U.S. sovereign credit analyst Joydeep Mukherji in an email on Wednesday, adding that S&P's view on the U.S. underlying credit rating has not changed.

Mukherji in a recent interview said the scenario of the AA-plus U.S. credit rating plummeting to D due to a default was "crazy, almost difficult, impossible to imagine it."

Markets reacted positively to news of a potential, though temporary solution on Wednesday, with stocks rising and Treasury yields falling.

"Two months seems like plenty of time and (we) think the debt ceiling would be raised through reconciliation by then and do not expect to experience the past week come December," NatWest analysts wrote in a research note on Wednesday.

Republicans said Democrats could use the intervening weeks to pass a longer debt-ceiling extension through a complex process called reconciliation, which would allow Democrats to marshal their razor-thin majority in the Senate to approve the measure without any Republican support.

Goldman Sachs analysts wrote on Wednesday that the ultimate outcome may be "what had seemed like the most likely outcome all along, which is that Democrats use the reconciliation process to increase the debt limit just before the deadline" after exhausting all other options.

Even so, there are serious risks for President Joe Biden and his fellow Democrats.

Under the temporary extension plan, Democrats would have to address the debt ceiling issue again in December, just as another federal government shutdown looms. That could complicate their efforts to pass two massive spending bills that make up much of Biden's domestic agenda.

Mike O'Rourke, chief market strategist at JonesTrading, wrote in a note to clients that he expected McConnell to "continue to grant limited debt limit extensions right through the (2022) mid-term elections if the lack of urgency continues to slow the Democrats' reconciliation spending bill.

The stakes are high if a solution is not reached.

Financial risk firm Moody's Analytics, which is a separate entity from Moody's Investors Service, said a default would be a "catastrophic blow" to the U.S. economic recovery from the COVID-19 pandemic and upend global financial markets.

Moody's Analytics noted that an inadvertent missed Treasury bill payment in 1979 caused bill yields to spike 60 basis points and remain elevated for several months at the cost of tens of billions of dollars. The 1979 technical default was blamed on check-processing glitches.

The major credit rating agencies do not expect the U.S. will default. Still, Mukherji and his counterpart at Fitch Ratings in recent research and interviews said a default, including a temporary or so-called technical one, on any Treasury bill, note or bond payment would push the country's respective ratings of AA-plus and AAA down to D.

Moody's Investors Service, which rates the U.S. Aaa with a stable outlook, said it saw a "limited" impact on the country's rating in the case of a default and would likely downgrade the rating for all U.S. Treasury securities and keep it on review until it was clear "a cure would happen."

Even without a default, if a solution is not in hand to avoid a cash crunch the United States risks losing another of its triple-A ratings. S&P famously cut the rating a notch to AA-plus on Aug. 5, 2011, in the wake of a round of political wrangling over the country's debt.

Major financial institutions have considered the United States an AA-plus-rated credit since October 2020, down from AAA where it stood since 2017, according to David Carruthers, head of research at Credit Benchmark, a financial data and analytics company that collates the internal credit risk views of more than 40 institutions around the world, including 15 global systemically important banks.

Mukherji in an interview last week said that a U.S. default on a debt payment would be highly unusual as it would be a result of politics and not economic woes. Still, at the end of the day it's the same thing.

"If you don't pay, it really doesn't matter what the reason was -- you are in default."

(Reporting by Karen Pierog; editing by Megan Davies and Leslie Adler)

Danziger Draws

Jeff Danziger lives in New York City. He is represented by CWS Syndicate and the Washington Post Writers Group. He is the recipient of the Herblock Prize and the Thomas Nast (Landau) Prize. He served in the US Army in Vietnam and was awarded the Bronze Star and the Air Medal. He has published eleven books of cartoons and one novel. Visit him at DanzigerCartoons.

Senate Republicans Vote To Shut Government And Crash Economy

A report released by Moody's Analytics on September 21 warns that failure to raise the ceiling on the U.S. national debt and to renew the spending authority of the U.S. Treasury when it expires on September 30 will lead to a default that "would be a catastrophic blow to the nascent economic recovery from the COVID-19 pandemic."

Senate Republicans on Monday night blocked the bill that would fund the government and raise the debt ceiling, bringing the United States to the brink of both a government shutdown and an economic recession.

Not a single Republican voted to advance the funding bill, which had passed the House a week ago and would prevent the government from shutting down at the end of Thursday, when the current funding bill expires.

The country will reach the ceiling on its ability to borrow to pay its debts in early October. If it isn't raised, the country will default, sending it into an economic tailspin that Moody's said would cost 6 million jobs and $15 trillion in household wealth.

The report said that a default would particularly hurt the U.S. bond market, generally considered a relatively safe place to invest for retirement.

Treasury bonds are basically loans to the government made by investors that are paid back by a specified date; a default would mean the loans are not repaid on time. "Americans would pay for this default for generations, as global investors would rightly believe that the federal government's finances have been politicized and that a time may come when they would not be paid what they are owed when owed it. To compensate for this risk, they will demand higher interest rates on the Treasury bonds they purchase. That will exacerbate our daunting long-term fiscal challenges and be a lasting corrosive on the economy, significantly diminishing it."

The report said a potential default would be "cataclysmic":

Stock prices would be cut almost in one-third at the worst of the selloff, wiping out $15 trillion in household wealth. Treasury yields, mortgage rates, and other consumer and corporate borrowing rates spike, at least until the debt limit is resolved and Treasury payments resume. Even then, rates never fall back to where they were previously. Since U.S. Treasury securities no longer would be risk free, future generations of Americans would pay a steep economic price.

Democrats slammed their GOP colleagues, with Rep. Adam Schiff of California calling their refusal to close debate on the legislation and move to a vote on it before the deadline "craven."

"Every single McConnell Republican just voted to blow up the entire economy and start a depression for no reason except because the President is a Democrat," Rep. Bill Pascrell (D-NJ) tweeted.

"Mitch McConnell just 2 years ago: 'America can't default. That would be a disaster.' Now he's flirting with that disaster because he thinks it'll notch him a political win," Sen. Sheldon Whitehouse (D-RI) tweeted.

Senate Minority Leader Mitch McConnell said when Donald Trump was in the White House that not raising the debt ceiling would be catastrophic.

But now that President Joe Biden is in office and Democrats control both chambers of Congress, McConnell is refusing to provide any Republican votes, saying Democrats have to do it on their own with a more complicated procedural maneuver.

"We will support a clean continuing resolution that will prevent a government shutdown," McConnell said Monday. "We will not provide Republican votes for raising the debt limit."

Congress raised the debt ceiling three times on a bipartisan basis when Trump was president and McConnell served as Senate majority leader.

"Note that Democrats never filibustered the debt limit under Bush and actually provided most of the votes for cloture under Trump," Seth Hanlon, a senior fellow at the Center for American Progress, tweeted. "What McConnell is doing now is unprecedented, disgraceful, and dangerous."

Republican members are claiming that they don't want to raise the debt ceiling because Democrats are working to pass Biden's economic plan, which would provide funding for infrastructure such as roads and bridges, paid family leave, child care, and added dental and vision benefits under Medicare.

But the raising the debt ceiling means enabling payments on the debt the United States has already accrued, not on future spending. While Trump was in office, Republicans helped add $7.8 trillion to the national debt, the third biggest increase as a share of the size of the economy under any president in U.S. history, the Washington Post reported.

It's unclear what will happen next, as Republicans bring the economy to the brink.

House Speaker Nancy Pelosi tweeted on Monday night, "The full faith & credit of the United States should not be political. Republicans' reckless decision to block government funding & raising the debt ceiling threatens 6 million jobs, financial ruin for countless families, military paychecks & Social Security payments to seniors."

Published with permission of The American Independent Foundation.

Danziger Draws

Jeff Danziger lives in New York City. He is represented by CWS Syndicate and the Washington Post Writers Group. He is the recipient of the Herblock Prize and the Thomas Nast (Landau) Prize. He served in the US Army in Vietnam and was awarded the Bronze Star and the Air Medal. He has published eleven books of cartoons and one novel. Visit him at DanzigerCartoons.

GOP Attacks Democrats For Voting To Preserve Nation’s Credit

Republican campaigns will harshly criticize Democratic lawmakers who vote to raise the debt ceiling in the 2022 midterm elections, the leader of the GOP's Senate campaign arm said.

"They're going to get held accountable for it," Sen. Rick Scott (R-FL), who leads the National Republican Senatorial Committee, told NBC News' Sahil Kapur in an interview on Thursday.

When asked if the debt ceiling issue will be a subject of Republican campaign ads attacking Democrats, Scott responded, "Oh, you better believe it." He added that Republicans also plan to criticize Democrats if they succeed in passing the $3.5 trillion infrastructure bill that's currently making its way through Congress.

Members of both political parties have voted to raise the debt ceiling in past years. Republicans in Congress voted to increase the debt limit three times during former President Donald Trump's tenure.

During Trump's time in office, the United States added $7.8 trillion to the national debt. The GOP's 2017 tax cuts, which largely benefited the wealthiest Americans, will add roughly $1.9 trillion to federal deficits over the next decade, according to the Congressional Budget Office.

Since President Joe Biden assumed office, however, Republicans lawmakers have started using what was once a routine procedural vote as a cudgel to hold the U.S. economy hostage for their short-term political gains.

The federal government will hit its so-called "debt ceiling" sometime in October. If Congress doesn't act to raise the debt ceiling, funding for U.S. government agencies, programs and services will lapse. Further, the Treasury Department would default on the United States' debt, sending the country into an immediate recession that could wipe out 6 million American jobs and trillions of dollars in household wealth.

Senate Minority Leader Mitch McConnell — who voted to raise the debt ceiling just two years ago — has said Republicans won't vote to continue funding the government this time around.

But when Trump was president, McConnell argued that not raising the debt ceiling would be catastrophic for the country.

"I certainly don't think any Senators are rooting for a debt limit crisis that could put our full faith and credit at risk," McConnell said in 2019. "That means every one of our colleagues should actually vote for it."

McConnell is now going so far as to block the debt ceiling bill from an up-or-down vote and has vowed to filibuster the vote. He also wants Democrats to use a more complicated Senate procedure called budget reconciliation to raise the borrowing limit just with Democratic votes.

This decision has little to do with actual governance, and everything to do with scoring political points against Democrats — no matter the cost to Americans. Scott himself said this will be the GOP's playbook ahead of 2022: to hammer Democrats in ads for increasing the debt.

Still, it's unclear how effective Scott's strategy will be.

Polls have shown that 52 percent of Americans support Democrats' wide-ranging spending plan, which would make child care more affordable; give American workers 12 weeks of paid parental leave; lower the eligibility age for Medicare recipients; and add dental, vision, and hearing benefits to existing Medicare plans.

The debt limit, by contrast, is not a top concern among American voters.

An Axios/Ipsos poll from August found that "government budget and debt" ranked sixth among the most important issues for voters, behind the COVID-19 pandemic, political extremism, climate change, crime, and health care.

And a Gallup poll from August found just two percent of Americans saying that the "federal budget deficit/federal debt" is the "most important problem facing the country today."

Published with permission of The American Independent Foundation.

McConnell Threatens To Blow Up World Economy, As Trump Cheers

Reprinted with permission from Alternet

Republicans and Democrats in the federal government still haven't reached an agreement on the United States' debt ceiling. But Senate Minority Leader Mitch McConnell, according to Washington Post sources, recently met with Treasury Secretary Janet Yellen and two former Treasury secretaries — Steve Mnuchin and Henry Paulson — to discuss the matter.

Read Now Show less

Fed Chairman Warns Of 'Severe Damage' If Republicans Force Debt Default

Washington (AFP) - The chairman of the US Federal Reserve called on lawmakers to raise the nation's borrowing limit urgently on Wednesday, warning that failure to pay government debts would do "severe damage" to the economy.

"It's just very important that the debt ceiling be raised in a timely fashion so the United States can pay its bills when it comes due," Jerome Powell said as the central bank concluded its September meeting. Failure to pay, he added, is "just not something we can contemplate."

Powell's admonition came after six former US Treasury secretaries also urged the Senate to overcome the impasse "without delay" to avoid the harmful fallout should Washington default on its debt.

However, the plea for quick action looks set to fall on deaf ears, as the opposition leader in the Senate has steadfastly refused to cooperate with the ruling Democrats to increase the debt ceiling.

That could lead to chaos in financial markets, officials have warned.

The Democratic-controlled House of Representatives passed a measure that would suspend the debt limit until after next year's midterm elections and fund government operations until December 3.

But it is now stuck in the Senate, which has until September 30 to take action to avoid a shutdown and a second deadline of mid-to-late October to suspend the debt ceiling.

Powell warned that "no one should assume that the Fed or anyone else can protect the markets or the economy in the event of a failure" by the United States to service its debts.

And the group of former finance ministers -- who served under presidents Jimmy Carter, George W. Bush, Bill Clinton and Barack Obama -- said in a letter to congressional leaders of both parties that even a short-lived default could threaten economic growth.

"It creates the risk of roiling markets, and of sapping economic confidence, and it would prevent Americans from receiving vital services," they warned.

"It would be very damaging to undermine trust in the full faith and credit of the United States, and this damage would be hard to repair," according to the officials.

They said protecting the "unshakeable creditworthiness" of the United States "is a sacrosanct responsibility."

'Different This Time'

But Republican Senate leader Mitch McConnell continues to use the debt limit as a political bludgeon to protest President Joe Biden's spending plans -- although he argued in favor of increasing the cap under former president Donald Trump.

"If Washington Democrats want to jam through trillions of dollars and reckless spending all by themselves, they can raise the debt limit, all by themselves," he said on the Senate floor Wednesday.

Under Trump, the ceiling was suspended for two years, but was reinstated on August 1 with debt at $28.4 trillion.

The debt deadline looms as Democrats are hoping to secure a sweeping $3.5 trillion social policy package on a party-line vote, without dealing with Republicans.

That bill is itself bogged down in the usual morass of internal rivalries, however, with moderates nervous about the high ticket price, and progressives demanding the deal is in the bag before they will consider other spending priorities, such as infrastructure.

Biden invited two dozen lawmakers from the warring center and left wings to the White House Wednesday in a bid to forge a united front on the package, which would make for the largest single federal spending spree in US history.

"People wonder why is it different this time, given the fact that over the last 80 years the debt ceiling has been raised 98 times," Senate Republican Conference chairman John Barrasso told a news conference.

"Well, it's different this time because the Democrats are doing all of the spending. They're proposing trillions and trillions of additional spending without a single Republican vote."

Senator Mike Lee accused the Democrats of trying to "have their cake and eat it, too" by demanding a bipartisan debt ceiling increase rather than just going it alone.

"They've got the votes to raise the debt ceiling, if that's what they want to do. They don't want to do it without Republican votes," he said.

"Interestingly, however, they're just fine dumping three and a half trillion dollars on the American economy without a single Republican vote."