January 16: Debt ceiling fight, tanks for Ukraine, unemployment rates, and broken dishwashers
by Joe Noser, Research Associate
Since I last wrote one of these posts, my first season of law school exams has come and gone, with the usual elation and disappointment that defines this thing called life. We've also had a new year, a wild shitshow of a Speaker election for Kevin McCarthy, and revelations that President Biden was, like President Trump, also stupidly careless about classified documents. There's plenty to discuss, so here's what's Coming Down the Pike this week.
This Week
As Secretary Yellen has warned, the U.S. will hit the debt ceiling on Thursday
We don’t really have to pay it all back. Really.
There was a certain level of juvenile enjoyment in watching members of Congress go completely off script/their usual talking points during the 15-round fight for Speaker at the beginning of the year, but now the real-world implications of that fight are now starting to play out. Janet Yellen, the Treasury Secretary, anticipates that the U.S. will hit the debt ceiling Thursday. After that, she will begin to deploy emergency countermeasures the Treasury Department can use to prolong a default. But if Congress does not raise or suspend the debt ceiling before those countermeasures are no longer viable/effective – and the time for that is expected to be around June – the U.S. could default on some of its debt for the first time in its history.
There's a lot going on here, so I'm going to break it down for you. First, some points of clarification. The debt ceiling is stipulated by Congress, which sets a hard cap on the amount of money the U.S. can borrow. We borrow money to pay for a lot of things, including the $1.7 trillion omnibus bill Congress passed in late December to fund the government through the fiscal year, which ends Sept. 30. We also borrow money to pay interest on our national debt, which now sits at roughly $31.5 trillion. To put that gobsmacking amount of money into perspective, one billion seconds is about 32 years, while one trillion seconds is about 32,000 years. So yeah, we're seriously in the red.
So, who owns that debt? Well, I'm glad you asked. Most of our national debt is owned by the public by way of various Treasury bonds. These bonds have AAA ratings, meaning they're the safest investment on the market. Federal government agencies like the Social Security Trust Fund also own a lot of U.S. debt. In fact, if you were to put the debt owned by Social Security, the Military Retirement Fund, and all other pension/retirement funds together, you'd get about half of all U.S. debt. That's well over the $7.6 trillion owned by foreign investors, about $1.1 trillion of which is owned by China.
If the U.S. defaults on some of its debt, it will crush both current and future retirees who are reliant on the government making interest payments on the Treasury bonds they own–and on those bonds maturing. It will also tank America's AAA credit rating, which will make it much more difficult to borrow money in the future. Such a default would send the economy into a tailspin because the bedrock investment asset out there – the U.S. Treasury note/bond – would be both unstable and devalued.
Republicans, especially the House Freedom Caucus, have serious leverage in any debt ceiling raising talks. In exchange for voting to raise the debt ceiling, they want to see a significant decrease in non-military discretionary spending and "reforms" to non-discretionary spending. That means cuts to everything from SNAP benefits to Medicare/Medicaid and Social Security. And they're willing to gamble with the full faith and credit of the United States – and the financial well-being of the nation's elderly – in order to get it. For now, Wall Street thinks they're bluffing, but I don't think that will last much longer.
After Britain's move to provide Ukraine with tanks, Germany will face more pressure to do the same
A British Challenger 2 tank poses for the camera while working in Iraq.
Over the weekend, the Russians killed dozens of civilians when they used a KH-22 ballistic missile attack to target Ukrainian civilian infrastructure and hit an apartment building in Dnipro. As I write this, civilians are still buried in the rubble. On the same day, a protest against NATO aggression (with no hand-made signs, mind you) was held in Times Square. Talk about great optics.
Ukraine was able to shoot down 21 of the 33 missiles used in the attack, but they could not stop the missile that hit the apartment building because they don't have the technology to do so. The calls for the Biden Administration to authorize the U.S. to send ATACMs - a surface-to-air missile system that would double the current range Ukraine possesses to hit Russian targets – will likely grow louder following the attack, although it's still unlikely those calls will be answered. Biden and his team have dragged their feet because they're worried such a move would further provoke Putin to use even deadlier weapons. In addition, ATACMs require additional logistics that would make them operable no sooner than nine months from now. Instead, the U.S. is sending 50 Bradley Fighting Vehicles, a relatively decent anti-personnel vehicle that's still a major upgrade over Ukraine's current weaponry. For its part, France is providing more modern light tanks, and Britain responded by sending a significant number of self-propelled artillery pieces and Challenger 2 tanks – a battle tank that far outmatches any Russian tank currently on the battlefield. Poland is also expected to send the impressive German-made Leopard 2 tanks to Ukraine, but Germany is dragging its feet on providing its own Leopard 2 tanks to the effort – although it is not saying it will block Poland from doing so.
With brutal fighting still going on in the Donbas region even through the winter, Ukraine has had some success with some armored offensives. The nation's defense ministry says it needs 300 tanks to take back the territory it's lost. So far, it has commitments from the West to get about 50.
Following the pattern of last week's unemployment rate news, new jobless claims will be lower than expected
Last week's unemployment rate came back at 3.5%, .2% lower than expected and much to the satisfaction of the Biden White House, which, by the way, is now seeing Biden polling at higher than 50% in some opinion polls for the first time since July 2021. Initial jobless claims are expected to come in at 214,000, but with gas prices going down again, wages still strong, and a strong U.S. dollar, don't be surprised if that number is more like 200,000. We'll find out Thursday.
Someone will come fix Joe’s dishwasher
Joe’s hands are getting wrinkled waiting for the repairman.
This has nothing to do with politics or news; I'm just choosing to put it out into the world because I am tired of beefing with my apartment complex and washing utensils by hand.
Good news of the week
The Atlantic published a story Sunday that indicated the mortality rate for cancer in the U.S. is down one third(!) since the 1990s. Since President Nixon declared the War on Cancer in 1971 (he declared war on the Rule of Law the next year, but that one wasn't announced with any public fanfare), the United States has spent hundreds of billions of dollars on research into late-stage cancer treatments, with limited results. But you know what has worked? Behavior changes and more screening. So sure, we can all be disappointed with the sorry state of healthcare in the U.S., or our inability to not turn gas stoves into the latest battlefield of the culture war. But at least we know we can save lives from cancer. That's gotta count for something. You can read the story here.
Artices I recommend
The U.S. classifies a helluva lot of information. We should focus those efforts on keeping private data secret instead. Here's a Twitter thread that makes the same argument.
For something new and different, here's my old camp counselor's essay on realizing he needed to get sober.
I hope you all have a good week. Sending good vibes to anyone who's been applying to jobs/internships recently.