What the hell is Mitch McConnell doing?
Yet again, as Democrats are dazed, divided, and desperate, the Senate Republican leader rides to their rescue.
McConnell, Kentucky’s senior senator, is bailing out Senate Majority Leader Chuck Schumer (D, New York). McConnell will deliver enough GOP votes to help Democrats increase the national debt limit by $480 billion through December. The Senate reportedly will vote today on this bipartisan fiscal-recklessness pact.
If McConnell planned to collapse beneath Schumer’s pressure, he should have done so quietly. Instead, McConnell very dramatically persuaded Senate Republicans unanimously to ignore Schumer’s and President Biden’s cheap default drama and, instead, invite him, Pelosi, and Biden to push Democrats to boost borrowing thresholds on their own.
McConnell held a news conference to highlight GOP unity. Having displayed resolve and rallied the Republican base, McConnell now whips out his oft-deployed white flag, just as the battle began. This will enrage and demoralize Republicans who, just days ago, were girding for a major fight over fiscal responsibility.
Mitch McConnell? He’s more like Mitch McClellan.
“Mitch caved,” Senator Elizabeth Warren (D, Massachusetts) crowed Wednesday. She told The Hill: “And now we’re going to spend our time doing childcare, health care, and fighting climate change.”
Had McConnell’s nerve not vanished like a sandcastle at high tide, he could have forced Democrats to walk and chew an entire turkey at the same time. Grappling with the debt limit would have disoriented through much of October, even as House Speaker Nancy Pelosi (D – California) scrambles to pass the $1.2 trillion “infrastructure” bill and Biden’s $3.5 trillion Build Back Better tax-hike and welfare boondoggle before her self-imposed Halloween deadline. Mitch’s debt-limit giveaway lets Democrats drop that Butterball and march single-mindedly toward their socialist utopia.
Even worse, McConnell let himself be spooked by Democrats’ loud lies.
The warnings about America facing an October 18 Argentine-style national-debt default are pure rubbish. Belief in this myth reflects a confluence of Democrat deceit and economic illiteracy. Alas, McConnell is among the illiterates.
The national debt is like a giant personal credit card. If Jack Jones owes $5,000 on his MasterCard, he would not default on November 1, if he could not scrape together $5,000. He only would default if he failed to make the minimum payment of, say, $250. If Jones sends MasterCard $250, everybody is happy.
Likewise, Uncle Sam would not default if he could not pay America’s $28.8 trillion national debt this month. However, if he missed his monthly debt-service obligations, only then America would default. Washington can avoid default simply by underwriting interest payments on the national debt, not by coughing up the underlying principal.
Despite shouted Democrat lies, America is not careening toward fiscal ruin.
Yes, Washington should slash spending and leave new entitlements unlaunched. The budget axes and machetes should be sharp and in perpetual motion.
But there is neither a need nor an expectation that Washington suddenly would fill this Grand Canyon of red ink. So long as Treasury covers the monthly minimum on the national-debt “credit card,” there will be peace in the valley.
U.S. Department of the Treasury
Fortunately, the federal government collects lots more money every month than what it needs to finance interest. The Monthly Treasury Statement details how much Washington collects and disburses. Figure 1, above, illustrates Table 9’s data.
For August 2021, $268 billion in receipts reached the U.S. Treasury. Net interest payments totaled just $42 billion. Treasury gathered $226 billion more than necessary to avoid default. How much more? More than six times the amount required to satisfy U.S. bond holders.
August was no anomaly. For 2021, the first month of each quarter confirms that revenues overwhelm net-interest expenditures:
Revenue: $384.6 billion
Net interest: $25.2 billion
Revenue: $439.2 billion
Net interest: $34.0 billion
Revenue: $262.0 billion
Net interest: $37.9 billion
Ditto last fiscal year:
Revenue: $3.4 trillion
Net interest: $344.7 billion
Cash cascades into the Treasury every month and inundates the sums needed to make bond holders smile. Default is a microscopic risk.
“King Kong is coming!” Biden, Schumer, Treasury Secretary Janet Yellen, and other Democrats screamed all week. McConnell foolishly panicked. And then the killer ape turned out to be an organ grinder’s monkey.
Several Republican senators have not been bamboozled by the Democrats’ pathetic charade. Florida’s Rick Scott and Pennsylvania’s Pat Toomey sponsored the Full Faith and Credit Act, which Toomey first introduced in 2011. This legislation would make debt-service the first bill that Treasury pays each month. This would render default virtually illegal, so long as revenues outpace interest obligations.
This legislation also would make Treasury stop spraying money, as if with a firehose. Instead, after interest, Treasury would prioritize Social Security checks, VA assistance, GIs’ salaries, and Medicare benefits.
Senator Toomey said: “This bill would simply prevent Democrats from taking the full faith and credit of the U.S. hostage and ensure we make timely payments to our creditors, seniors, veterans, and the active-duty military until they stop playing politics.”
If enacted, the Scott-Toomey measure would soothe markets and avoid the Black Friday-type scenario around which top Democrats are synthesizing a crisis and terrifying senators McConnell, Joe Manchin, Kyrsten Sinema, and others into doing what the Left wants: boost the debt limit, replenish the national Visa card, and hike America’s available credit. This would let Democrats purchase $1.2 trillion of “infrastructure” and fund Biden’s $3.5 trillion tax-and-spend orgy.
Rather than accept Schumer’s demands and lead Republicans into bed with fiscally promiscuous Democrats, McConnell should introduce the Scott-Toomey bill as an amendment. Make Democrats vote on this concrete plan to put debt service atop Treasury’s monthly stack of bills. If Democrats want default to disappear as a potential nightmare, they unanimously would join Republicans and pass the Full Faith and Credit Act.
If Democrats balk at this major step toward fiscal prudence, then Americans will know that they dragged out the default monster simply to frighten the country.
For now, Democrats are high-fiving each other. Yet again, McConnell has proven to be the Democrat Party’s best friend. He has handed them exactly what they want, in exchange for… nothing.
With the GOP, once more, cleaning up after Democrats stumble out of their latest boozy blowout, the question occurs: How much longer will Senate Republicans stomach Mitch “General McClellan” McConnell as their “leader?”
Deroy Murdock is a Manhattan-based Fox News Contributor, a contributing editor with National Review Online, and a senior fellow with the London Center for Policy Research.