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[quote=Anonymous]From historian Heather Cox Richardson’s April 17 newsletter 
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House speaker Kevin McCarthy (R-CA) was in New York City today, trying to calm jitters among investors by explaining to members of the New York Stock Exchange that the Republicans will not allow the government to default on its debts even as he insisted that the Republican Party must use the debt ceiling to enact legislative policies it can’t win through normal political negotiations.

The debt ceiling is an artificial limit to how much the Treasury can borrow to pay existing obligations to which Congress has already committed. It has nothing to do with future spending, which is hammered out in budget negotiations.

But McCarthy has not offered a budget proposal because the Republican conference cannot agree on one. Yesterday, for example, McCarthy floated the idea of cuts to food assistance for millions of low-income Americans, which Senate Republicans want no part of. Unlike House members, many of whom represent such gerrymandered districts they feel insulated from any backlash to extreme proposals, Senators run at-large. For them, cutting food support while backing tax cuts for the wealthy and corporations would be politically dangerous.

Instead, McCarthy is trying to use the threat of national default to extract the cuts extremist members of his conference want. The Biden administration has made it clear that it will not negotiate over paying the nation’s bills, especially since about a quarter of the debt was accumulated under former president Trump, $2 trillion of it thanks to tax cuts for the wealthy and corporations. In those years, Congress raised the debt ceiling three times. Biden presented his own long, detailed budget, full of his own priorities, as a start to negotiations in March, and he says he is eager to sit down and hammer out the budget once McCarthy produces his own plan. McCarthy is trying to deflect from his inability to do that but is confusing the issue, suggesting that he has the right to negotiate instead over whether or not to pay our bills.

Since defaulting, or even approaching default, would devastate both the U.S. and the global economy, not even all Republicans back McCarthy’s threats. When Sara Eisen of CNBC asked McCarthy if he had the support of his party for what he is proposing, McCarthy answered, “I think I have the support of America,” and that he would “get the party behind it.”

Meanwhile, when asked about a potential default, Mark Zandi, the chief economist at Moody’s Analytics, told Tony Romm of the Washington Post, “It will be financial chaos…. Our fiscal problems will be meaningfully worse.… Our geopolitical standing in the world will be undermined.”
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