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With a new but possibly temporary deal providing a potential pathway out of the impasse between congressional Democrats and Republicans over raising the federal debt limit, Judy Woodruff gets more on the state of play and what's at stake with Jared Bernstein, a member of the president's Council of Economic Advisers.
For more on the state of play and what is at stake, we hear from Jared Bernstein. He's a member of the president's Council of Economic Advisers.
And I spoke with him a short time ago.
Jared Bernstein, welcome back to the "NewsHour."
Jared Bernstein, White House Council of Economic Advisers: Always a pleasure to be here.
So, as you and I sit here at the table a little before 5:00 in the afternoon, where do things stand with regard to Democrats and Republicans and the debt ceiling?
Well, the debt ceiling has not been raised.
And it should be. It should have been already. This should be a joint effort, wherein Democrats and Republicans work together to raise the debt ceiling in order to make payments that both of them have already agreed to.
I think this is a source of confusion, Judy, sometimes on this issue of the debt ceiling, that, somehow it's forward-looking, it has to do with spending that is coming down the pike. That's not what it's about.
It's about paying for bills that both sides have already incurred. And that's why, 80 times over the past 60 years, the debt ceiling has been increased, in many cases bipartisanly. And, in fact, in the Trump administration, Democrats worked with Republicans to increase the debt ceiling three times.
And this was the Trump administration that added $8 trillion to the debt. So it is time for Democrats and Republicans to work together to get this behind us.
So, if what the Senate minority leader, Mitch McConnell, is offering is a temporary extension, saying, all right, we will go along with extending the debt ceiling, but only for a limited period of time, does that allow you, the president and Democrats, to do what you need to do right now?
Well, I think what we have from the minority leader is a press release at this point. I don't know of a formal offer. So it's a little bit hard to talk about details. And it's the kind of thing you want Chuck Schumer to take the lead on.
What we really don't want to see is a complicated two-step process, nothing that kicks the can down the road, that says, well, we will raise it a little now, we will raise it more later.
And the reason for that really gets back to the economics. We have an economy with a robust recovery ongoing, but Delta is still upon the land. The virus is still out there. And this is absolutely no time to be fooling around with the faith and credit of the U.S. government's debt. And that's precisely what this effort unnecessarily does.
So, again, debts incurred by both parties. Hold hands, as we have done in the past, work together, we could get this behind us in the next five minutes, not in the next two, three, four, six months.
But what the minority leader, Senator McConnell and other Republicans are saying is that this is Democratic debt, that Democrats…
Oh, no, no, no.
… simply want to move ahead right now in order to pay for the programs they want to pass.
So, let me say that that is factually incorrect, and it's important to get this straight. This is not Democrat debt. It's not necessarily all Republican debt. It's both.
And the reason for that is that this has nothing to do with forthcoming spending. It has nothing to do with building back better, the infrastructure plan, the Rescue Plan. It has nothing to do with new spending. It has everything to do with the stock of debt that both parties have accumulated.
And the debt ceiling is simply a line in the sand that says, when you hit that, the Treasury can't go out and borrow what it needs to borrow in order to pay bills that both parties have already incurred.
This is perfectly analogous to the two of us going out to dinner, which I would very much enjoy, and, after dinner, the check comes and we say, no thanks. We don't want to do that.
But one party is doing that. The Republicans are not cooperating with the Democrats, not working together, as Democrats did under the Trump administration, to lift this ceiling quickly and efficiently.
A few other quick questions, Jared Bernstein.
Should the Democrats have anticipated that this was going to happen, given that you have got such small margins in the — small margin in the House and virtually a one-vote margin…
… literally a one-margin, in the Senate?
Totally fair question, and one I can answer from the perspective of someone on the inside.
We have been working with Republicans from the minute we got because we foresaw this. This kind of thing, you can see coming, because you know the inflows and the outflows of revenues and receipts.
And so we began trying to make these negotiations occur in a seamless way, just as Democrats worked with Republicans to raise the debt ceiling three times in the Trump administration, an administration that added a trillion dollars to the debt. It's not Democrat debt. It's not Republican debt. It's debt that's been incurred by both parties over the years.
And we were planning from the very beginning to do this. Now, initially, by the way, initially, Republicans wouldn't help us. And we said, OK, get out of the way. We will do it ourselves. Then they started playing filibuster games.
And so it's not just that they're not getting out of the cart and pushing. They're standing in front of the cart.
Two other very quick things.
Number one, as you know, Treasury Secretary Janet Yellen and others are saying it's time to do away with the debt ceiling. What about that? Will President Biden go along with that?
There's very little Janet Yellen economics that I don't agree with. And I would include that view as well.
Look, the debt ceiling played a role at one point in time, but it's certainly been weaponized in a way that is really very destructive for the economy. We can even start to see that now in some of the spreads in interest rates that are reflecting some nervousness about this.
So, there is absolutely no reason for Republicans and Democrats not to work together and get this behind us.
And do away with debt ceilings in the future? Is that what you're saying?
I think that that is a perfectly fine aspiration.
I think, for now, let's focus on getting this episode behind us. Let's raise the debt ceiling and get back to the business of growing this recovery and legislating the building back better agenda that doesn't just get us to the other side of the crisis, but builds back an economy that's much more beneficial for the middle class.
And, just quickly, what's at stake if this doesn't get resolved?
I think it's unthinkable.
I mean, Janet Yellen, you mentioned a second ago, used the word catastrophic. Any kind of undermining of U.S. debt, which plays such a fundamental role in global financial markets, would be an economic cataclysm, not just for us, recessionary, not just for us, but for other countries as well. It's unthinkable.
And it's something that, again, both parties can resolve right away. The idea of tricks and weaponizing and let's do it in parts, no, we should work together tonight to get this done.
Jared Bernstein, who is part of President Biden's Council of Economic Advisers, thank you very much.
My pleasure, Judy.
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