What the Debt Limit Fight Is Actually About

It’s not about debt at all. It’s about turning back the political clock 100 years.

WASHINGTON, DC - MAY 03: A group of Senate Republicans hold a news conference to urge the White House and Senate Democrats to pass the House GOP legislation that would raise the debt limit and cut federal spending outside the U.S. Capitol on May 03, 2023 in Washington, DC. U.S. President Joe Biden has invited Congressional leaders to the White House next week to negotiate a compromise to prevent the federal government from defaulting on its debt, which may happen as early as June 1. (Photo by Chip Somodevilla/Getty Images)

A group of Senate Republicans hold a news conference to pass the House GOP legislation that would raise the debt limit and cut federal spending, outside the U.S. Capitol on May 3, 2023, in Washington, D.C.

Photo: Chip Somodevilla/Getty Images

It’s hard to believe I’m typing these words, but there’s a genuine chance Congress may fail to pass an increase in the debt limit. That would mean the U.S. might then in turn default on its debt sometime in June.

No one knows what would happen at that point, because it’s completely unprecedented. But it almost certainly would be deeply unpleasant, with huge job losses, unpredictable bits of the economy imploding, and knock-on effects in other countries that will make them both fear and hate us for decades. It would be the kind of massive self-inflicted wound that can be pulled off only by empires in their dotage.

Congress has veered close to this disaster in the past. But I’ve always believed that it would be impossible for it to actually happen, because the Republican Party’s funders on Wall Street and in corporate America understood how much damage it would do — not just to the country in general, which they don’t care about, but also to them specifically — and wouldn’t allow it.

I still believe that’s the most likely outcome, fingers crossed. However, the GOP donor class, never fans of reality to start with, has been drifting further and further into the fever swamps where the party’s politicians and base live. Many of the right’s ultra-wealthy used to understand the world well enough to act in their own best interest. Some still do. However, that minority now has far less power than billionaires who are as glued to Fox News as the party’s rank-and-file are. And these billionaires are suffering from the same cognitive impairment Fox causes all of its devotees.

And this brain-damaged community has a coherent worldview: that for the survival of America, they must destroy the “administrative state” — aka the New Deal, aka everything people like about the federal government, such as Social Security or regulations that stop chemical companies from dumping poison in your drinking water. Meanwhile, normal Americans have no idea the right has this planned, or even what those words mean.

Any non-hard-right reading of history suggests that the New Deal, and the basic infrastructure of U.S. politics it created, was a compromise that allowed human beings to live with capitalism. The only alternatives in the 1930s were (on the right) some form of fascism that would keep capitalism but eliminate democracy, or (on the left) dismantling capitalism and trying something wholly different.

The U.S. right has now come to the conclusion that this compromise was a disastrous mistake, one that they hope to start correcting by manufacturing this crisis. Grover Norquist, founder and president of Americans for Tax Reform and a key right-wing strategist said in 2001, “My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub.” Right on time, they see a key opportunity to begin fulfilling Norquist’s dream.

This perspective not always enjoyed popularity within the Republican Party. Dwight Eisenhower famously wrote this to his older brother in 1954:

The Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it. … Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. … Their number is negligible and they are stupid.

You can judge for yourself whether people like this are stupid, but it’s inarguable that their number is no longer negligible. Indeed, today Eisenhower would be considered a terrifying Woke Marxist by much of the Republican Party. Newsmax would run 37 segments exposing his damning admission to his brother that “the policies of this Administration have not been radically changed from those of the last.” In other words, he was starting from the same essential premises as New Deal Democrats.

That is no longer the case; GOP leaders do want radical change and believe they can get it. As former Vice President Mike Pence recently said, “I think the day could come where we can replace the New Deal with a Better Deal.” Strategists like Steve Bannon vow to conduct the “deconstruction of the administrative state.” The kinds of spending cuts demanded by the bill passed by the House would be a powerful first step to disemboweling the administrative state of taxes and regulation that have oppressed us for so long.

Reaching Bannon’s ultimate goal would mean a return to pre-New Deal politics, with Americans once again facing the kind of vicious predatory capitalism that can only exist when democracy is severely hobbled: It’s underappreciated that the glory days of this form of capitalism took place when most adults couldn’t vote. This is what Peter Thiel had in mind when he decried “the extension of the franchise to women” and explained that freedom for capital was incompatible with democracy.

The right’s thinkers have managed to convince its most prominent politicians that this is the way to go. Florida Gov. Ron DeSantis, for instance, has constantly fulminated about the administrative state in his embryonic presidential campaign. They all either don’t understand the implications of what they’re pushing for, or do understand it but are sincere authoritarians. In any case, they feel they have no choice, since what Republicans like Eisenhower considered normal politics is in fact the road to some kind of apocalypse. If U.S. continues within the New Deal framework, they think, it will inevitably lead us to a totalitarian future, with starving Americans trapping rats to eat and all 5-year-olds being forced to undergo sex reassignment surgery. As Tucker Carlson recently told the Heritage Foundation, probably the most powerful think tank on the right, what they now face “is not a political movement. It’s evil.”

This sounds absolutely bonkers, and it is. But that doesn’t change the fact that a significant chunk of the U.S. right believes it. Some do understand that a U.S. default would cause a significant dose of pain. But they believe this is necessary to avoid the far greater pain currently headed our way, when Bill Gates will personally vaccinate everyone at gunpoint every three days. Indeed, in private moments they probably tear up at their own courage, perceiving themselves as true patriots willing to make this sacrifice for the greater good.

They also understand that any suffering by regular people would likely redound to their political benefit. After all, the Democratic Party has itself been trumpeting the awful consequences of the national debt for the past 30 years. Bill Clinton announced in his 1996 State of the Union address that “the era of big government is over.” In Barack Obama’s 2011 State of the Union address, he told us “we have to confront the fact that our government spends more than it takes in. That is not sustainable.” Just last fall, the Biden White House proudly declared they’d achieved “the largest ever decline in the federal deficit.” All the Republicans want to do now is to negotiate to restore the kind of fiscal sanity that the Democrats have endorsed since the 1990s. How can Joe Biden refuse?

The Biden administration apparently did have a plan to deal with this situation. It was to close their eyes and hope it was still 2011. The Washington Post quotes a top Obama official from that time — during a previous debt limit standoff — as saying their playbook had been “really getting business leaders in key districts to lobby their congressman to tell them how important it was that the U.S. doesn’t default on its debts.” However, “This is not the Republican Party of George W. Bush or his father. Most of them do not care if Fortune 100 CEOs are freaking out.” Finding this out has apparently flummoxed the Biden team and left them with no other ideas except trying the same thing again.

It would be nice to believe Biden has a secret team ready to spring into action and execute one of the potential bold solutions if the debt limit isn’t increased in time. However, no journalists or pundits close to the White House have been able to locate much sign of this. The most that appears to be happening is fervent debate within the Biden administration over whether they could claim the 14th Amendment of the Constitution requires them to ignore the debt limit and continue borrowing money — i.e., a debate that, given the obvious trajectory of the GOP, they should have settled two seconds after Republicans took the House in the 2022 midterms. The possibility that the people at the summit of power have no credible plan to ward off onrushing catastrophe seems impossible, unless you are familiar with all of human history.

So get ready. One political faction has decamped to a fantasy world. Meanwhile, the other faction is living in another fantasy world in which the first faction hasn’t done this. Things here in the reality of our fading empire may be about to get pretty dicey.

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