A New Can of Worms

Republican Senate Minority Leader Mitch McConnell faced criticism for potentially assisting Democrats in eliminating the filibuster. His agreement with Democrat Majority Leader Chuck Schumer to ultimately allow Democrats to increase the debt ceiling on a simple majority vote was the subject of criticism due to fears of setting a new precedent. “It’s a terrible idea. Terrible. It would circumvent the filibuster. This is nuking the filibuster,” Sen. Mike Lee told NBC News .

Mr. Lee’s statement is incorrect in terms of the legislative process used. A widespread false equivocation has generated a new narrative. A crucial element is left out of the discussion on the debt ceiling agreement. For Democrats to have proceeded to a one-time simple majority vote, which would allow the increase of the debt ceiling by a specific number, a minimum of 10 Republican votes were ultimately necessary. A filibuster-proof majority voting in favor was still required. Without reaching the 60-vote threshold, there would be no means of advancing to the simple majority vote. This aspect alone separates this procedural tactic from outright eliminating or creating a carve-out for the filibuster. Indeed, it was part of an overall convoluted method to increase the debt ceiling, but the filibuster itself remained untouched. Mr. Lee could have expressed a valid point of concern about how this course of action could eventually reshape precedent.

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The agreement on the debt ceiling has allowed Democrats to employ a deceptive messaging campaign. Democrats have begun utilizing this to legitimize their desire to eliminate outright, reform, or create an issue-based carve out of the filibuster. If it can apply to raising the debt ceiling, why not voting rights? The answer is simple but unhelpful to the cause. Democrats cannot get 10 Republicans to support a simple majority vote on voting rights legislation. But of course, reality does not matter when pursuing an agenda. The false equivocation being propagated is apparent to anyone not willfully blinded by partisan rhetoric.

You will see Democrat Senators such as Sen. Raphael Warnock of Georgia attempt to equate the two.

The obvious fallacy of this statement is that Democrats did not raise the debt ceiling alone. Mr. Warnock conveniently leaves out that very relevant piece of the puzzle out. Democrats would not have been about to raise the debt ceiling without the 14 Republicans who allowed the majority only vote to proceed. There would certainly not be 14 Republicans voting in favor to move to a simple majority vote on the Freedom to Vote Act or John Lewis Voting Rights Advancement Act.

With Build Back Better on the sidelines for now due to an array of disagreements with Sen. Manchin of West Virginia and other aspects still being worked out. Democrats have brought voting rights legislation to the forefront. Prioritizing an attempt to address what many advocates have said should have been their top priority from the start. Persuading their two primary Democrat holdouts, Mr. Manchin and Sen. Kyrsten Sinema of Arizona, to support reforming or eliminating the filibuster has not succeeded. Ms. Sinema on Wednesday released a statement reaffirming her support for the 60-vote threshold. Meanwhile, Mr. Manchin has said he would like any changes to be bipartisan. “All of my discussions have been with bipartisan, Republicans and Democrats. The rules change should be done to be where we all have input in this rules change because we’re going to have to live with it,” Mr. Manchin said. Mr. Manchin has met with Republicans to discuss smaller bipartisan measures which would be more akin to improving the overall functionality of the Senate.

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Resolving the debt ceiling dilemma may have contributed to a recent change of heart by some Democrats. “We’ve been here almost a year, and we’ve seen enough: It’s time to change the filibuster to protect voting rights,” Democrat Sen. John Hickenlooper of Colorado said in a statement. Democrat Sen. Maggie Hassan of New Hampshire also recently announced on the Senate floor her support for eliminating the filibuster in the name of passing voting rights legislation.

It certainly appears the recent debt ceiling resolution has at least accelerated these recent turn of events. Though it would be safe to assume even if the debt ceiling increase was smooth sailing, Democrats would have eventually gone down this same road. Undeniably it is now the Democrat calling card and a vehicle for Democrats to drive home their agenda.

Fore and foremost, this is not being done in the name of creating a more functional Democratic Senate. The task at hand for Democrats is to devise a legislative approach easing their ability to pass an agenda item, if not multiple agenda items. Call me cynical, but there would be no mention of voting rights legislation if Democrats held the advantage in gerrymandering or did not see an advantageous method of increasing their support. Never forget there is always an ulterior motive in every piece of legislation without exception.

Image Credit: “December 10 march for voting rights”  by Michael Fleshman  is licensed under CC BY-SA 2.0

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Original

On The Money — How a federal debt default could affect you

We take a look at the ways a debt ceiling default could hit your own finances. We’ll also look at how one big bank is preparing for a default and why the 1980s are haunting the Federal Reserve. 

🎬 But first, your favorite seat in the movie theater may get more expensive. 

Welcome to On The Money, your guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom.

5 ways a federal debt default could hurt Americans

Americans are getting a crash course on the country’s borrowing limit, as a high-stakes standoff on Capitol Hill dominates national attention.  

Extraordinary measures the Treasury Department is taking to temporarily stave off a default are expected to give Congress until at least June to reach a deal to raise the limit. 

Below are just a few of the reasons, experts say, the U.S. can’t afford to default. 

  • Recession is almost certain: Recession fears have already been on the rise for months, as economists and lawmakers have paid close attention to the Federal Reserve’s ongoing interest rate hikes in response to high inflation. 
  • Inflation could lower – but at a steep price: Experts say inflation could also lower, but not in the way most would hope. Some say prices would fall as a result of a slower economy in such circumstances as demand weakens, but not if they were already hindered by shortages. 
  • Stock market takes a tumble: Stock portfolios would take a serious hit if the nation defaulted on its debt, sapping retirement accounts and draining crucial sources of revenue for major companies. 

The conflict: GOP lawmakers have vowed not to vote to raise the debt ceiling without major spending cuts despite promising they would not let the U.S. default. Even so, Republicans have yet to unify behind any proposal to cut down the federal debt and are sparring over how much to cut defense spending, if at all. 

At the same time, Democrats have instead pressed for a clean bill to raise the debt limit without conditions, accusing Republicans of holding the economy hostage for their partisan goals. 

Aris delves further here

LEADING THE DAY

Why the 1980s recession haunts the Fed 

The ghost of the early 1980s recession is haunting the Federal Reserve. 

With inflation still near 40-year highs and the U.S. economy slowing, the Fed’s aggressive rate hikes have fueled concerns of a central bank-induced recession akin to the one triggered by former Fed Chairman Paul Volcker during the 1980s. While Volcker’s rate shock ended two decades of rising inflation, it did so at the cost of a severe recession. 

  • Fed Chairman Jerome Powell has frequently praised Volcker’s refusal to back down and channeled that persistence into his own battle with inflation.  
  • But most economists believe Powell can wage a far less costly war against rising prices, given major shifts in the economy — and Fed policy — since the days of Volcker. 

“Inflation looks like it has already peaked and never got near the 14.5 percent peak reached in 1980, so the Fed will not have to raise rates as high as it did back then,” said Eric Swanson, an economics professor at the University of California, Irvine.

“We also benefit today from the experience that we gained back then: Everyone knows that inflation was high and was successfully brought down with high interest rates, so we know the Fed can do it again,” he said. 

Sylvan and Riley Gutierrez McDermid explain here

GET READY

Bank of America’s Moynihan says firm is preparing for US debt default 

Bank of America CEO Brian Moynihan on Monday said the firm is preparing for the U.S. to default on its debt after surpassing its borrowing limit last month.  

“We have to be prepared for that, not only in this country but in other countries around the world. You hope it doesn’t happen, but hope is not a strategy — so you prepare for it,” Moynihan told anchor Poppy Harlow on “CNN This Morning,” noting the company is preparing as it would “in a natural disaster.”  

Moynihan, who runs the nation’s second-largest bank, said there’s value in lawmakers debating across the aisle over what to do about the national debt but said “everybody has to” batten down for a potential default.   

Julia Mueller has more here

BAD TO BETTER

Americans’ views of US economy tick up: poll  

Americans’ positive views of the United States economy remains well below half, but have ticked up slightly over the past week, according to a new CBS poll.  

  • The new poll found that 33 percent of Americans think the condition of the economy is good, an increase from last week’s number of 28 percent.  
  • That comes after Friday’s blockbuster jobs report that showed the U.S. adding 517,000 jobs in December. 

As the nation’s debt limit remains in limbo, more than half of Americans say that Congress should not raise the debt ceiling while 45 percent saying that it should. But when presented with the prospect of a default, 67 percent said Congress should raise the debt limit. 

Lauren Sforza has more here

Good to Know

It is once again time to take your finances into account and perhaps pay up to Big Brother at the IRS.  

Thanks to the Inflation Reduction Act of 2022, the Internal Revenue Service was able to begin a free online program for those who qualify.  

Other items we’re keeping an eye on: 

  • Treasury Secretary Janet Yellen said she sees the possibility of “significantly” easing inflation in the U.S. economy, even as the government deals with the ramifications of reaching its borrowing limit and as economists worry about a potential recession. 
  • Google on Monday unveiled a new artificial intelligence tool called Bard, its rival product to the increasingly popular ChatGPT tool. 
  • Senate Majority Leader Charles Schumer (D-N.Y.) is facing renewed pressure from advocacy groups to prioritize antitrust bills targeting tech giants this Congress.  

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow. 

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Yellen says ‘every responsible member of Congress’ must agree to raise debt ceiling

Treasury Secretary Janet Yellen on Monday insisted that “every responsible member of Congress” must agree to raise the debt ceiling to avoid “catastrophe” after the U.S. reached its borrowing limit last month.

“America has paid all of its bills on time since 1789, and not to do so would produce an economic and financial catastrophe, and every responsible member of Congress must agree to raise the debt ceiling,” Yellen said on ABC’s “Good Morning America.”

The U.S. reached its borrowing limit of around $31.4 trillion in January, and lawmakers have been locked in an across-the-aisle conflict over allowing the federal government to take on more debt.

The White House and many Democrats are pushing to raise the borrowing limit quickly, while Republicans are pressing for spending cuts as a condition to raising the ceiling. 

Yellen has been implementing so-called “extraordinary measures” to maneuver funds and help the government pay its bills until sometime this summer, but the country can’t take on any new debt to pay what it owes until Congress lifts or suspends the debt ceiling. 

Raising or suspending the debt ceiling does not add to the national debt, but simply allows the Treasury Department to pay expenses already approved by Congresses and presidents.

The Treasury secretary and economists have sounded alarms that the U.S. could tip into a deep recession if lawmakers don’t take action on the borrowing limit. Yellen has said she’s “nervous ” that defaulting on the debt could put the U.S. economy in a tailspin as the federal government would be unable to spend money and likely cause a financial crisis.

But Yellen on Monday said the economy is “remaining strong” as inflation appears to cool .

“You don’t have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years. What I see is a path in which inflation is declining significantly, and the economy is remaining strong,” she said.

The U.S. added 517,000 jobs in January, far above economists’ expectations, as the unemployment rate dropped to 3.4 percent.

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