Threat of GOP-imposed default reaches new level as deadline nears

There’s been speculation for months about when, exactly, the U.S. government would default without Congress addressing the debt ceiling. In some circles, it’s become known as the “x date”: the point at which the Treasury Department exhausts its ongoing efforts and the economic catastrophe begins in earnest.

It was against this backdrop that Treasury Secretary Janet Yellen raised a few eyebrows yesterday afternoon. NBC News reported:

I’ve seen some headlines suggesting the Treasury secretary told lawmakers that June 1 is the new “drop-dead date.” That’s not quite what happened.

After reviewing recent federal tax receipts, our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time,” Yellen wrote in yesterday’s letter.

The cabinet secretary, pointing to “inherently variable” federal receipts and outlays, added that the actual deadline could slide to “a number of weeks later.”

All of which is to say, Yellen is letting lawmakers know they have to get their act together by next month — or else.

My general impression of the conventional wisdom is that most observers believe cooler heads will prevail, and the relevant players will somehow work something out before it’s too late. We’ve been here before — this is not, alas, the first time radicalized Republicans have played games with the full faith and credit of the United States — but the nation has never defaulted before. Some kind of solution, the assumption goes, will come together before the x-date.

It’s probably time to start adjusting those expectations.

To be sure, I hope the conventional wisdom is accurate. But I’ve looked for reasons to assume that this will work out fine, and I haven’t found much.

Part of the problem is practical: The House, which is on a break this week, will only be in session for 12 days between now and June 1. President Joe Biden, meanwhile, is scheduled to be in Australia and Japan in a couple of weeks, limiting his availability.

But at the heart of the problem is the nature of the political conflict. This isn’t a situation in which Democrats and Republicans have different numbers in mind, and a compromise solution exists somewhere between them. Rather, this is a crisis in which the GOP is insisting it will crash the economy on purpose unless the party’s radical demands are met, while Democrats insist there can be no negotiations with those threatening Americans with deliberate harm.

The middle ground between these two positions is elusive.

House Majority Whip Tom Emmer, the #3 member of the House Republican leadership, appeared on CNN over the weekend and was asked to assure viewers that the United States would not default. The Minnesota congressman hedged, leaving open the possibility that his party would follow through on its threat to harm the hostage — which in this case is us.

The Washington Post’s Catherine Rampell added, “[T]his catastrophe is much closer than most media, markets, politicians, [and] voters seem to realize.”

As for what happens now, in response to Yellen’s letter, Biden invited congressional leaders to a May 9 meeting on the debt ceiling, and House Speaker Kevin McCarthy has accepted the invitation. If recent history is any guide, there will likely be a spirited debate over how to characterize the meeting, including a fight over whether the scheduled conversation constitutes “negotiations.”

Regardless, the path toward a resolution is relatively narrow. Maybe the White House will dramatically alter its approach and begin talks with Republicans over a possible compromise. Perhaps GOP leaders will dramatically alter their approach and move toward the kind of “clean” bill the party has supported dozens of times in recent generations. Maybe the relevant players will delay the process, attach the debt ceiling to a looming government funding bill, and create a new “fiscal cliff.”

Or who knows, maybe policymakers will get creative. Will the Biden administration declare the debt ceiling itself to be unconstitutional, touching off a court fight with the global economy hanging in the balance? Would Republicans agree to temporary suspensions of the debt ceiling, preventing default while keeping the broader process alive?

I don’t know, and by all appearances, the relevant players don’t, either. The only apparent certainty is that the month of May will be a bumpy ride.