Some progressive policy analysts in the past have pushed for the minting of a $1 trillion coin.
In 2013, there was speculation that the Obama administration might mint such a coin, deposit it at the Federal Reserve, and then draw $1 trillion to pay bills if Congress didn’t raise the borrowing limit. Former President Barack Obama later acknowledged that he had considered the idea.
Is this debt-limit standoff different?
“This one looks scarier to me,” said Mark Zandi, chief economist at Moody’s Analytics, as he noted that he’s seen a lot of standoffs over the debt ceiling.
“Given the chaotic House, it just feels that the odds that lawmakers don’t get this done on time is much higher than anytime in the past.”
The Moody’s economist told MarketWatch that he’s nervous about lawmakers intentionally not increasing the debt limit — and also about Congress potentially making a mistake. The process of getting debt-limit legislation to the president is not easy even when you have a well-functioning Congress, said Zandi, who has been described by Republicans as “Democrats’ favorite economist.”
Zandi said he hopes investors view this standoff as different than other ones, because if markets don’t begin to price in a possible default, it will increase the chances of a default.
“Lawmakers will take cues from markets,” he said.
On the other hand, Senate Minority Leader Mitch McConnell, a Kentucky Republican, said that he “would not be concerned about a financial crisis.”
“We’ll end up in some kind of negotiation with the administration over what the circumstances or conditions under which the debt ceiling will be raised,” McConnell said.
Related:Debt-limit fix should come from McCarthy and Biden, says McConnell
Couldn’t Democrats have handled this last year when they had control of both chambers of Congress?
As 2022 was winding down, top Democrats privately and publicly discussed the possibility of using what’s known as a budget-reconciliation process to hike the debt limit.
However, the Biden White House reportedly gave up hope for that, as senior administration officials saw little chance of attracting any Republican votes for it, and they didn’t believe they had the 50 Democratic Senate votes needed for passage via reconciliation.
MarketWatch’s Greg Robb contributed to this report.
Now read: Opinion: The debt ceiling is a farce, not a crisis
-Victor Reklaitis
(END) Dow Jones Newswires
01-27-23 0903ET
Copyright (c) 2023 Dow Jones & Company, Inc.
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