The column below reflects the views of the author, and these opinions are neither endorsed nor supported by WisOpinion.com.
Jerome Powell, Federal Reserve chair, sounded the alarm on the consequences of Republicans refusing to raise the debt ceiling: “Congress raising the debt ceiling is really the only alternative. There are no rabbits in hats to be pulled out on this. No one should assume the Fed can protect the economy from the nonpayment of the government’s bills, let alone a debt default or something of that nature.” Raising the debt ceiling allows the government to borrow money to pay for spending and tax cuts previously approved by Congress.
Mark Zandi, chief economist, Moody’s Analytics, warned that the GOP-led ultimatum not to raise the debt ceiling without draconian spending cuts would be “cataclysmic.” Zandi said: “The only real option is for lawmakers to come to terms and increase the debt ceiling in a timely way. Any other scenario results in significant economic damage.” He also said it was time to stop playing games altogether.
Treasury Secretary Janet Yellen also rejected Wisconsin GOP Senator Ron Johnson’s hare-brained scheme to prioritize paying some federal bills if the debt ceiling is not raised. Yellen said: “Prioritization is simply not paying all of the government’s bills when they come due.” The truth is there are no shortcuts. Democrats and Republicans have equal responsibility in voting for spending and tax cuts that increased the debt. Moreover, raising the debt ceiling used to be a routine bipartisan action.
However, the GOP is now taking the economy hostage. Another ultimatum from the House far-right Freedom Caucus demands billions in cuts to education, healthcare, science and other spending or the debt ceiling will not be raised. Temper tantrums don’t constitute a constructive plan. Massive spending cuts will tip the economy into a severe recession. These extremist demands will not protect beloved federal programs such as Medicare. President Biden pointed out that the ultimatum showed the “value set” of the GOP and that the cuts would fall on the backs of regular folks.
In contrast, Biden has proposed a plan to protect Medicare by extending the Medicare Hospital Insurance Trust Fund solvency by 25 years. 60 million Americans, including over 1,200,000 Wisconsinites, depend on Medicare coverage. But the House Republican Study Committee wants to raise Medicare eligibility to 67. And, Senator Johnson wants to transform Medicare into a discretionary spending program. This means Medicare would be subject to yearly cuts. Imagine partisan infighting, budget paralysis and government shutdowns over cutting Medicare coverage. Biden has a better idea.
Biden has proposed increasing the “Medicare tax rate on earned and unearned income above $400,000 … .” Moreover, he wants to close a loophole in Medicare taxes which allows wealthy pass-through business owners to avoid paying their fair share of Medicare taxes. I can already hear Johnson squealing. His highest priority has been to preserve and expand this tax break (the top 1 percent gets most of the tax savings). Johnson is disingenuous when he claims to want to “fix” Medicare. Biden called Johnson’s bluff with his plan to protect Medicare coverage.
–Kaplan wrote a guest column from Washington, D.C., for the Wisconsin State Journal from 1995 – 2009.
