When members of Congress started boarding their flights home Thursday, not one of them knew how long they’d be gone. The possibility of a shorter-than-usual Memorial Day recess looms large as negotiators desperately try to hammer out a deal on the debt ceiling before June 1. “Every hour matters,” House Speaker Kevin McCarthy (R-Calif.) told ABC. “That’s why the White House has to become very serious about this.” To the average observer, it sounds ominous. But as Americans prep for the long weekend, plenty are wondering, how does any of this affect me?
Former congressman Dave Brat, who has a Ph.D. in economics, gets that question a lot. But first, he told “Washington Watch” guest host Jody Hice, it’s important to understand one thing: “It’s impossible to default.” You’ll never hear that in the mainstream media, he explained, but “we have way more money [available]. A default means you default on the U.S. Treasury Bond. If we ever defaulted on the U.S. Treasury, we’d all be fishing under a bridge with Frodo,” the dean of Liberty University’s School of Business joked. “It would be the end of Western civilization. So that’s not even in play.”
All of this hysteria, Brat says, stems from the “word games” the Left and Treasury Secretary Janet Yellen are playing. “What she’s talking about is paying all the bills for all Democratic spending. That may not happen, and that’s not a big deal. You just prioritize your spending in order. But we have plenty of money to pay off any interest on the debt in treasuries. And so, the American treasury holder doesn’t need to be worried about that.”
That doesn’t mean this isn’t a critical moment for our country, Brat explained. Right now, the Democratic-run Senate doesn’t have a budget plan. House Republicans do. “So all the leverage is on the Republican side right now.” And what does the GOP want? To cut spending. President Joe Biden and his party have, so far, flatly refused. But we’re on the verge of having $50 trillion dollars in debt to “hand off to the kids in 10 years,” Brat warns. With an interest rate of 5%, taxpayers are looking at $2.5 trillion a year just in interest payments. “That’s three times the U.S. military budget right now,” he emphasized, and none of it pays down the actual debt.
In other words, “there are $2 trillion deficits for the next 10 years around the necks of the kids. Everybody knows this, but the mainstream press will not cover any of [it],” Brat shook his head. To deal with that, “our friends [in the House] Freedom Caucus, who are being called every nasty word there is — ‘MAGA Republicans,’ ‘Republican extremists’ — they want to trim $4 trillion off of the $50 trillion in debt.” We’re not talking about a radical amount, he insisted. America would still be $46 trillion in debt in a decade. So it should be “an easy case to make to the American people” that we need to start trimming back.
As Hice pointed out, “We’re talking numbers that are astronomical that no one can even imagine [them].” And that’s part of the problem, Brat agreed. Another problem is that most people are too comfortable borrowing themselves. “The American consumer right now is $17 trillion in debt. Consumers have $1 trillion in credit card debt, $1.5 trillion in college loan debt. We’re in debt up to our eyeballs. And we’ve got a recession coming up, another financial crisis caused by the Federal Reserve for their mismanagement.”
By keeping the interest rate at 0% for a decade, the Fed has done the country a major disservice. [They’re] in a tough bind,” he explained, “[because] they basically want inflation, so they can pay the debt back with cheaper dollars. And so that’s where we stand.”
But this idea that we’re going to default on the total spending package, on $50 trillion, is baloney. “There’s no way,” Brat insisted. Even so, both sides need to come together on the debt ceiling, and Republicans “have the moral high ground for a change.” All they have to do is “tell the American people the basic facts, and you win.”
Changing America’s spending habits is “a hard, hard fight,” Brat agreed. “So you better fight now while we’ve got the leverage.” Remember, he went on, “Our team passed a bill. The Senate has not. Everything is on our side. Biden said. ‘I’m not going to negotiate. I don’t care’ and thumbed his nose at the whole thing. … But we need to hold strong. It’s time to take care of the American people and the kids. The liberals say they care about the kids. Fifty trillion dollars in debt means otherwise. They do not care about the kids.”
At least GOP leaders seem to understand the stakes, Hice said. “I don’t know that I’ve ever seen a time where the Republicans [have appeared so] unified. … Literally in the hands of Republicans right now is the tool to roll back out-of-control spending.” But will Republicans hold together?
“Yeah,” Brat replied. “If they do not, they will cease to be a party,” he warned. “We’re holding four aces.”
Suzanne Bowdey serves as editorial director and senior writer at The Washington Stand.
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