Democrats Give Government Handouts and Get Nothing in Return

Readers are certainly aware of the debt ceiling fight going on in Washington right now between the Republican-controlled House of Representatives and the White House.

The U.S. Treasury is not allowed to issue more public debt than is permitted by a statutory ceiling. New debt can be issued to retire maturing debt, but no net new debt can be issued. Still, the U.S. is running multi-trillion deficits, which means that new debt much be issued to finance the deficits.

The ceiling on new debt was hit months ago, but the Treasury has managed to scrape up some cash due to positive cash flow during the April tax season (that’s now over), some Treasury slush funds like the Exchange Stabilization Fund, and some other sources like excise taxes. That game is ending, and we’re heading toward the X-Date when the Treasury actually goes broke and can’t pay all the bills.

Default on U.S. Treasury note interest and principal payments is a possibility. Congress can raise the debt ceiling as they have many times before, but the parties are fighting over any strings that can be attached to the increase.

The House has passed a fiscal 2024 budget that includes a debt ceiling increase. The White House insists on a “clean” debt ceiling increase with no strings attached. The two sides are in desultory negotiations.

Meanwhile, the clock is ticking on the X-Date.

One of the sticking points is the House wants some work requirements for able-bodied working-age recipients before receiving food stamps (SNAP debit cards) and other benefits. The Democrats insist that the handouts should continue with no work requirements. This impasse is described in this article.

Normally one might expect the Republicans to cave on this issue, as they always seem to do. Yet, House Speaker McCarthy faces a determined faction in his party, including the House Freedom Caucus, that refuse to cave.

He needs their votes because he only has a five-vote majority and will not get any Democrat support. The standoff within the party and between the Democrats and Republicans is real. We’ll see what happens.

Meanwhile, the countdown is getting closer to zero. Markets are becoming more volatile and uncertain as the X-Date approaches. Now’s a good time to move to cash and gold until this political shoot-out is over.

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