The Beltway Game of Budgetary Chicken

Yellen says the sky will fall by June 1 if we don’t add more to the national debt.

Like everything else in the Biden-era, the national debt is in crisis mode.

As I referenced a couple of weeks ago in Jason’s Newsletter, “In September of 2020, the CBO predicted that the federal debt wouldn't hit close to $30 trillion until 2028. A year later, it already stood at $29 trillion and rising.”

The Fed’s War

It’s hardly surprising then that the Trea­sury De­part­ment hit its $31.4 tril­lion debt limit in January. It is now de­ploy­ing a se­ries of spe­cial ac­count­ing maneuvers to keep pay­ing the bills. Those maneuvers, though, are expected to run out soon, so Secretary Janet Yellen is demanding that Congress agree on a ‘clean’ debt limit hike or else.

The question for inquiring minds is what is the ‘or else.’

In order to scare the public (that is how authoritarianism operates), Yellen and her friends in the business press have been telling anyone who listens that the U.S. will face a catastrophic default by June 1st if Republicans don’t just shut up about spending cuts and raise the debt ceiling.¹

It’s the same game of budgetary chicken they play every September when the appropriations bills aren’t finished and a government shutdown looms. Ever since Bill Clinton got the best of congressional Republicans in the budget wars, they’ve been running scared with members like Rep. Adam Kinzinger blasting his own party (how’d that work out?) for what he labeled “shutdown idiocy.”²

Ronald Reagan, however, took another approach. He sat through eight of them and simply said, “Let’s shut down the government and see if anyone notices.’’³ The Gipper never really tamed the federal budget leviathan, but he understood there’s no point getting into a bidding war with a liberal.