The newest and most unexpected item in the latest House Republican continuing resolution/debt limit bill is this:
Like the emerging Senate agreement, the House plan would extend the debt ceiling to February 7. But the House plan would bar the Treasury Department from using accounting gimmicks known as “extraordinary measures,” increasing the transparency of the federal budget process and prohibiting what economist Donald Marron calls the “embarrassingly casual” use today of such measures by the Treasury Secretary. In the era of President Reagan and House Speaker Tip O’Neill, short-term debt limit increases with hard dates and no gimmicks were the norm. The House plan seeks to restore transparency to the process and deny bureaucrats the ability to use budget gimmicks to mislead the public about the financial condition of the United States.
It sounded like a turn on a dime, and Senate Democrats rejected it immediately. For two years, Republicans had favored (and passed in the House) legislation that mandated the Treasury pay debt service, entitlements, and veterans in the event that the debt limit was reached. Now, they were trying to bar the Treasury from shuffling money around? Republicans told me that this had been in the air for a while; Marron only spelled out his theory a few days ago, noting that it “would reduce the time the next debt limit increase will last,” but maybe shock the system so that these periods of brinkmanship didn’t last so long.
“I like it,” said Missouri Rep. Billy Long, a fomer auctioneer from a safe conservative seat. He co-sponsored the “Full Faith and Credit” act that would have tied Treasury’s hands on prioritization, and he saw this as a complement. “We need to be honest about how much money we’re spending in this country and how we’re gonna pay it back. It seems right now that they can pay it back whenever they want. A lot of times it seems it’s driven by politics. We’re gonna hit it in May. No, actually, we’re gonna hit it in June. No, actually, we’re gonna hit it Oct. 17.”
Most people figured that the delays in the debt limit were related to the shrinking deficit, a function of higher tax revenue and lower spending. But plenty of Republicans were convinced that the administration was playing games and needed to be stopped.
“You and I can find ways the game-playing has been done,” said Arizona Rep. David Schweikert, the former treasurer of Maricopa County. “If we’re going to actually start to have to build for debt management, there’s a bigger issue here. We, the administration and Congress, need to do debt management through the baby boom cycle, through this huge demographic cycle. We’ve got a 35-year cycle to work through. I like the concept of super-bonds. I like the concept of trills. You don’t get to have those debates and discussions if you have the administration able to game-play with the trust funds.”
Another reporter asked Schweikert to respond to some doom-saying quotes from Chinese bankers. “I lay this at the steps of the administration and Jack Lew,” said the congressman. “The unconscionable, unacceptable use of language, the word ‘default,’ when the borrowing we need for 2014 is we’re 16 percent short on revenue. To use the word ‘default,’ to scare the markets—are politics really that important to this administration that it ignores basic math?”
Schweikert ticked off ways that he, as a county treasurer, had sought balance. “The basic repo desk, running your ladders on your debt—it’s stunning that the politicians in the administration care more about keeping this as a wedge than the international markets. Even Geithner made it clear that he had the ability to prioritize. I don’t know who this new Jack Lew is. He’s not the same guy I knew 10 years ago when he backed Clinton … there is no such thing as default unless there is an actual evil attempt from the administration. When you have 18 percent of GDP coming in in cash, less than 2 percent going out in debt coverage—I’m stunned you all fall for it in the press. None of you were math majors, were you?”