Tag Archives: debt

Let it Fail

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Progressive-Democrats are moving to attach a debt ceiling increase, or “temporary” waiver to the debt ceiling, to a continuing resolution that would fund the Federal government for a few more months. House Speaker Nancy Pelosi (D) and Senate Democratic Majority Leader Chuck Schumer (D):

The legislation to avoid a government shutdown will also include a suspension of the debt limit through December 2022 to once again meet our obligations and protect the full faith and credit of the United States[.]

This proposal is both unnecessary and disingenuous. It’s unnecessary because as the Schumer Shutdown and the Obama Shutdowns both showed, the Federal government isn’t all that necessary in its present size. Indeed, some agencies and departments, forced to furlough employees due to the length of those closures, discovered that as many as 90% of their employees were unneeded, at least in those short- to mid-term periods.

The proposal is disingenuous because the debt ceiling needn’t be raised at all were Federal spending reduced to fit within existing revenue collections. The Progressive-Democrats, though, are hell-bent on passing their splendiferously wasteful multi-trillion-dollar reconciliation bill.

If the Progressive-Democrats insist on shutting down our government in favor of their out-of-control spending, let them. If their continuing resolution contains a debt ceiling raise or waiver, let the bill fail. Let a “clean” continuing resolution fail, too.

There’s an election coming up.

Update: Late last night, the House passed their version of a Continuing Resolution and debt ceiling raise bill along party lines: 220-211. Shamefully, the House Progressive-Democrat managers stripped out $1 billion that would have gone to Israel to replenish its Iron Dome system, depleted during the last terrorist rocket attacks from Gaza. Then Party voted down a resolution that would have restored the billion dollars to the bill.

That election….

Lies of the Progressive-Democrats

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Another in the interminable series.  This time, it’s Speaker of the House Nancy Pelosi (D, CA) demanding Republicans support raising the debt ceiling during this Congressional session:

We’re paying the Trump credit card with what we would do to lift the debt ceiling[.]

Not at all. What she—and her Progressive-Democrat syndicate family—want to do is raise the debt ceiling so they can borrow an additional $3.5 trillion for their reconciliation spend-a-thon.

Debt Ceilings and Spend-Thriftiness

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One hundred and three House Republicans have signed a letter committing themselves to never vote for a debt ceiling increase under any circumstances. Forty-six Senate Republicans have signed a substantially similar letter.  (Aside: the nine Republican Representatives and four Republican Senators should be asked why they’re not signing on.) The signatories

will not vote to increase the debt ceiling, whether that increase comes through a stand-alone bill, a continuing resolution, or any other vehicle.

Of course, Congressional Progressive-Democrats are in a snit over that. Their beef centers, amorally, on “You guys are spendthrifts, too!”

They say most of the spending that will cause a breach of the debt limit later this year was passed on a bipartisan basis before President Biden assumed office.
They also note that Republicans significantly increased the deficit when they were in power during the first two years of former President Donald Trump’s term….

True enough. Both parties are guilty of spending American taxpayers’ money like it’s all Modern Monetary Theory’s bottomless bank of monopoly dollars. That, however, is no excuse for continuing the fiscal—and national economic security—folly.

Progressive-Democrats are in control now, with a majority in the House and control of both the Senate and the White House.

Progressive-Democrats have, today and in the coming months, the political capacity to show that they’re not just a bunch of woke virtue signalers and to live the virtue they claim. Today and in the coming months, the Progressive-Democrats can adjust their spending ways to limit themselves to the existing debt ceiling.

Puerto Rico’s Bankruptcy

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Andrew Scurria and Heather Gillers have a piece in The Wall Street Journal that discusses various considerations now that the story of Puerto Rico’s bankruptcy is “just beginning for investors.”  One remark in particular caught my eye.

Complicating matters, Puerto Rico hasn’t yet decided which creditors have priority in a restructuring.

This lack of forethought, even of understanding, is illustrative of how Puerto Rico got into this mess in the first place.

The question shouldn’t center on creditors; the order of priority of debt type should be the primary criterion, with creditors within each type treated equally.  This prioritization should have been defined long ago, too.

Ideally, these failures will be redressed coming out of the present proceedings.

Long Maturity Debt Instruments

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Treasury Secretary Steven Mnuchin is kicking around the idea of instituting long-maturity debt instruments, specifically, 50-year and 100-year US bonds.

Treasury’s Borrowing Advisory Committee, though, demurs.  This committee, made of movers and shakers of financial institutions that are themselves movers and shakers in the bond market,

does not see evidence of strong or sustainable demand for maturities beyond 30 years.

They ask a not unreasonable question, too:

what types of investors would buy ultralong bonds….

On that, the US has tried long(er) maturity bonds before—50-year instruments to finance the Panama Canal and 40-year instruments in the Eisenhower and Kennedy administrations to, in Eisenhower’s words, stretch out the national debt, for instance.

Over the years, however, the Treasury concluded it could most efficiently finance large amounts of debt through regular auctions of 30-year bonds.

That’s not the only possible market for Treasury ultra-long bonds, though.  Just one venue might include investors, especially institutional investors, looking for ways to hedge really long-term risk.  Government ultra-longs might be one way.  The question, from Government’s perspective, thus is irrelevant.

Any lack of demand for such long maturities—in any venue—simply means that such debt instruments wouldn’t be bought.  That should be a market decision, made by American individual investors, not a centrally controlled market decision made by Government.

It’s also a cheap experiment to run: it would cost Government nothing to offer to borrow at such lengths when no one would lend at such lengths.