Some predictions I'll probably regret making later:
I feel like we will end up defaulting on our debt in June. I know we've been down this road before and we've always pulled a last minute deal but this feels different. The US House is under the control of an insurrectionist party and they are out for blood.
I don't think Biden will declare the 14th or "mint the coin". Both scenarios are fantasies.
I think the situation will last for several days at least. Longer maybe.
The House GOP will feel emboldened by the damage they are causing and double down. The intransigence will feed upon itself.
What happens after that will be a big old question mark. The Democrats could hold out until something breaks. Or they may cave immediately. Or Biden will make some sort of deal after all with a compromise everyone will agree with.
After that? Who knows. The blowback may kill the GOP, or Democrats may take the blame.
I want to remain hopeful that we'll avoid this scenario, but like I said this feels different. We are going to drive of this cliff, and no one is going to escape the blast radius when this thing goes off.
From my reading of the facts this is the last week to hammer out a deal before a default becomes unavoidable (there just simply won't be enough time to hammer out any sort of legislation that can be passed before the 1st of June). Basically we'll know by end of day Thursday if a default will happen or not, even if the exact date isn't quite set yet.
Well, we're past the soft deadline and things... are not looking good. I've suspected the Republicans are purposefully heading to default not as a negotiating tactic, but as an end goal. This is the new policy for them. Default now, Default forever.
@zalasur I’d like to suggest an alternative reasoning and maybe the longer-term strategy: The debt clause of the 14A was enacted specifically to prevent the failed insurrectionists from crashing the post-1865 Federal government by causing it to default on its war debt. The GOP may indeed try to drive us off that cliff. If that happens: 🧵
@zalasur …the first thing to watch for would be some major government contractor who doesn’t get paid because the Treasury is bankrupt, sues in Federal court to throw out the debt ceiling act that purports to tie Treasury’s hands, as an unconstitutional violation of the 14A debt clause.
@zalasur That gets standing…and yes it will wind up at SCOTUS eventually, but I don’t think there are more than 2 votes (Thomas and Alito) that would be in favor of actually dissolving the Federal government. Especially while the carnage from the government shutdown, inability to pay even for essential services, etc. plays out in the papers and the streets.
@zalasur Bottom line: SCOTUS will ultimately nuke the debt ceiling limit, permanently defanging it as a GOP obstruction tool, while Biden gets to keep his nose mostly clean and the GOP takes the bulk of the public blame for the economic damage.
In the interim: give your 401K balance a hug, it’ll be awhile before you see it again.
@zalasur …and in the long run, expect the Yuan to become the world’s next reserve currency. The damage to the bedrock reliability of the US dollar will be incalculable and it may never recover.
@mjf_pro I was about to say that if that's our best case scenario then we are truly f***ed since those cases could take weeks or months to wind through the courts, and by then the very government itself could become destablized.
I am relieved that the debt ceiling was lifted, though I'm not happy with the process overall. Again, the GOP had shown taking the economy hostage is a working strategy and they will keep doing it again and again to get their way.
Add comment