Geoff: Good evening and welcome
to the newshour.
The U.S. Government hit its debt
limit today, forcing the
treasury department to resort to
extraordinary measures to keep
the government paying its bills
and avoid the catastrophic
consequences of a default.
That's with the new gop-led
congress setting the stage for a
high-stakes showdown over
raising the debt limit.
Congressional correspondent Lisa
Desjardins joins us with the
latest.
It is great to see you.
For the unfamiliar, remind us
what this means if the country
has hit its debt limit.
Lisa: To use a cliche analogy,
we have reached our credit card
limit.
However, unlike most of us, the
treasury has more powers to deal
with hitting the credit card
limit, so they are dealing with
accounting mechanisms.
I am calling them extra ordinary
because they have to use them so
often in order to keep us paying
our bills.
How long will that last?
Estimates are till summer.
I want to draw attention to a
note Janet Yellen wrote today.
She wrote, " the period of
time that external measures may
last is subject to considerable
uncertainty."
That means no one really knows
how long we can keep treading
water.
Geoff: The timing ahead is
uncertainty.
The treasury is trying to buy
time.
In 2011, this brings midship
resulted in the U.S. Having its
credit rating downgraded for the
first time in history, and
retirement savings took a hit.
What is the risk this time?
Lisa: It is a significant risk.
A quick reminder that most
people believe the treasury
would pay our creditors, but the
treasury, by reporting a couple
years ago was that there is not
a clear plan.
Let's say they pay our bonds
right away.
But then they have to make
choices, prioritize.
Would it be that federal workers
have to be furloughed?
Is benefit programs?
Someone would not get money, and
the problem that could lead to
tipping in the economy.
All of those things including
interest rates and the world
economy could lead to an
avalanche of problems throughout
systems around the world.
Geoff: Why are these hard-line
Republican members of the house
willing to play roulette with a
still vulnerable economy?
What is their political
calculation here?
Lisa: They say this is one
problem, dealing with the debt
ceiling, but another they are
more concerned about is the size
of the debt itself.
Here's how Kevin Mccarthy put it
this week.
He stressed the most recent
omnibus spending bill, one of
the largest passed by congress.
Here's what he said.
>> They let two senators write a
$2.7 trillion omnibus bill that
no one got to see and jammed it
through in the middle of
December.
You realize why we have a debt
like we had in the past.
Why wouldn't we sit down now,
set up a budget, set up have to
get us to a balanced budget, and
let's start paying this debt off
and make sure the future
generation has as many
opportunities as we do?
Lisa: A lot going on.
He said, why don't we sit down?
What they are really saying is
we will not raise the debt
ceiling until you agree to
limits on spending.
They will put significant limits
on spending.
But they say the problem is so
large.
Let's look at where we are with
the national debt.
Let's look at the history of the
national debt relative to our
economy.
We are almost at World War II
levels and that 100% of our
economy range.
Let's look at what is forecast
from the congressional budget
office.
If nothing changes in how are
our congress and government
operate, that is where our debt
will go, to areas people say are
uncharted and a danger.
That is why conservatives are
doubling down.
They want the debt, which is its
own issue connected to spending.
Geoff: A lot of that spending
happened during the trump era,
and those same Republicans were
not sounding like Kevin Mccarthy
sounded today.
What gives?
Lisa: I was keeping track of
those spending bills Republicans
were passing, with her for the
military or veterans.
They had no problem with this
buffet of federal dollars they
were passing at that point.
What is happening is they are
coming into power and those
behind them, their core base, is
saying this is a problem, it is
about their identity.
They assert where those fiscal
Republicans are, but there are
also the combative Republicans
willing to risk everything for
brinksmanship.
Those two things are coming to
play right now.
Let's talk about what we think
could happen, what are the
scenarios ahead.
Geoff: How is this likely to end
up?
Lisa: We don't know, but I want
to tee off these chaotic
potentially months ahead with
these ideas.
First of all, Republicans could
potentially win out with this
freeze they want or a cut to
federal spending.
But already, we see industries
and agencies worried about that
scenario.
There could be bipartisan
measures to cut the budgets
ahead.
That is what happened in 2011.
There was a deal to put up more
guardrails on spending.
Or there could be no deal.
There could be a complete
standoff.
One side or the other has to
cave entirely.
Right now, the president is
saying he will not negotiate.
I have a feeling that whether
these things are connected in
press releases or knots, they
are going to have to have
conversations about federal
spending.
How much will Democrats give or
not, how much will Republicans
give or not?
Geoff: For one thing, we know
for sure you will be tracking
all of it.
Lisa Desjardins, thank you for
sharing that reporting.
Good to see you.