The Senate Passes the Debt Ceiling Agreement With No Changes, Biden to Sign

Senate Passes Debt Ceiling Bill

The Search for More Spending 

Ahead of the Senate vote, Politico reported The debt deal limits Pentagon spending. Lawmakers are already figuring out ways around it.

The pact passed the House late Wednesday with the support of most Republican defense hawks, even though the deal caps national defense spending at the administration’s $886 billion proposal for fiscal 2024.

The issue roiled the Senate ahead of an eventual vote on the debt limit agreement, as Republicans took to the chamber floor to rip the defense portion of the deal as inadequate and demand an emergency supplemental to pad the defense budget.

“The first problem of an inadequate defense budget could be addressed and remedied by an emergency defense supplemental,” said ranking Appropriations Republican Susan Collins of Maine. 

“Just as sure as I’m standing here, we will revisit this issue,” Sen. Lindsey Graham (R-S.C.), who will oppose the debt agreement if it doesn’t include higher defense spending, told reporters.

It means that an emergency funding bill to support Ukraine’s defense against Russia could become a way to evade the caps. The maneuver is reminiscent of how Congress and the Pentagon poured money into special war accounts for Iraq and Afghanistan to get around strict spending caps, a move critics derided as a “slush fund.”

Caps For Thee, Not Me

GOP defense hawks who helped pass the debt deal made clear they don’t view the cap as a ceiling for military spending.

Even some top Democrats want to find a way to boost military spending beyond the limits. Senate Armed Services Chair Jack Reed (D-R.I.) conceded lawmakers will likely use Ukraine funding to skirt budget caps for defense.

Bear in mind, Biden’s $886 billion request is the largest nominal defense budget in history.

Also note Congress allocated $70 billion to the Pentagon over the past two years that the administration didn’t request.

Why stop there? 

In addition to the “emergency” funding idea,  Graham is pushing for a vote on an amendment to the debt limit bill that would add an additional $41 billion for defense funding.

The Defense Spending Remedy

Graham and other Senate Republican defense hawks threatened to hold up the debt ceiling deal on Thursday, but ultimately came to an agreement with Senate Majority Leader Chuck Schumer (D-N.Y.) to move a supplemental defense spending bill later this year.  

The “supplemental” defense spending will offset some of the few spending gains that McCarthy negotiated.

Expedited Procedures 

In light of a pending default, Republicans and Democrats agreed to expedited procedures. This eliminated the possibility of extensive debates and any filibuster.

There were 11 amendments, each requiring 60 votes to pass. All of them failed.

Biden to Sign

Given the Senate made no changes, this bill will go to president Biden who will of course sign it. 

There are 99 Pages of Details in the Debt-Ceiling Deal, and a Big Trap

For an synopsis of what was in the Bill, please see There are 99 Pages of Details in the Debt-Ceiling Deal, and a Big Trap

The best part of the deal for Republicans is a provision that eliminates single, omnibus spending bills and to return to the tradition of passing 12 appropriations bills that cover the various parts of the federal budget.

Hopefully, this will keep spending bills on target and eliminate some earmarks. 

Republicans also got small changes in making some able-bodied people without dependents hold a job or be enrolled in a job training program to receive food stamps.

Spending reductions were minor and will likely be partially undone to appease Graham and the defense hawks. 

The big trap is Democrats will be able to push through environmental boondoggles easily while Republicans cannot do the same.  

Democrats got the better part of this deal and the House votes show just that. 

The 314-117 House vote consisted of 149 Republicans and 165 Democrats yes votes. 

Senate Numbers from Axios: 46 Democrats and 17 Republicans voted for it. 31 Republicans voted no.  5 progressives also voted no: Sanders, Fetterman, Markey, Merkley & Warren. Hagerty didn’t vote

This post originated on MishTalk.Com.

Thanks for Tuning In!

Please Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

If you have subscribed and do not get email alerts, please check your spam folder.

Mish

Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

This post originated on MishTalk.Com

Thanks for Tuning In!

Mish

Comments to this post are now closed.

45 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
RonJ
RonJ
2 years ago
“In light of a pending default…”
Truth be told, there never was an impending default. It was all a stage production, just like those Broadway shows people flock to.
Lisa_Hooker
Lisa_Hooker
2 years ago
Reply to  RonJ
Well if the impending default wasn’t enough distraction we also have the AI is going to kill us all distraction.
RonJ
RonJ
2 years ago
“…Republicans took to the chamber floor to rip the defense portion of the
deal as inadequate and demand an emergency supplemental to pad the
defense budget.”
So much for the claim that government spending is out of control. The U.S. has nukes and isn’t really threatened with military invasion by any other country.
Sunriver
Sunriver
2 years ago
Business as usual.
I wonder if the ‘Ouchie’ the Saudi Energy Minister stated, will materialize in response to the $4 trillion of new QE and US jobs report.
OPEC will want their cut.
KidHorn
KidHorn
2 years ago
We’re approaching Japan. Japan is going to see a total economic collapse within the next 5 years.
If everything is going so great, why do we need our government to add an extra 4 trillion to our debt over the next 2 years?
oee
oee
2 years ago
In what universe creating + 339,000, equals recession? the econ is firing on all cylinders. The Biden/harris admin has created 13 Million new jobs in less than 36 months of mandate. Trump/Pence LOST A NET 2.50 MILLION WITH LOWER INTEREST RATES AND HIGHER FISCAL DEFICITS.
You know nothing about econ. You should be replaced by a BOT!
It shows the spending on people juices the econ i e the The chip act; the IRA and the infrasctuturec law is putting people to work rather than the Trump tax cuts!
MPO45v2
MPO45v2
2 years ago
Reply to  oee
Just wait for the grumpy anti-Biden people to post comments that the numbers are all fake. JOLTS was up, ADP payrolls were up and now Payrolls are up. The Fed WILL need to hike again. I was going to do 4 or 6 month T-bills but now I’ll just do 30 days. Fed meeting in a couple of weeks.
oee
oee
2 years ago
Reply to  MPO45v2
We do not have to wait. Our friend Mish Shedlock claimed last year numbers were fake. I demand an answer from him to answer why the econ is creating jobs if the econ is in a recession. According to him, we have in recession since…2022.
MPO45v2
MPO45v2
2 years ago
Reply to  oee
You should know by now that calls for recession here are always 18 to 24 months too early which is why I am heavily investing in PUTS for January 2024 expiry.
Mish
Mish
2 years ago
Reply to  oee
It would behoove clowns like Oee to take a look at Gross Domestic Income.
And by the way, the divergence between jobs and employment explains GDI.
Report coming up.
oee
oee
2 years ago
Reply to  Mish
See Wrong wingers stoop to name calling when your predictions come to nothing. That is the typical argument from wrongwingers. BTW I am still waiting for Robots to replace…us!
Captain Ahab
Captain Ahab
2 years ago
Reply to  oee
Your Ph.D. in Econ is very helpful. Clearly, you know a great deal. And of course, unfettered immigration is a great start to rebuilding the post-Covid work force.
By the way, if your income tax rate was doubled, would you…
a) work harder to have the same amount of spendable cash
b) have more to save and invest for the future
c) think you were paying a fair amount to support government expansion
d) stop working, or work less hard
e) don’t know, don’t care.
oee
oee
2 years ago
Reply to  Captain Ahab
C) don’t care. Taxes do not have anything to do with econ growth;
The econ expanded more in the 1960’s than the 1980’s with …higher tax rates. The 1990’s Clinton expansion was longer and deeper with HIGHER TAXES than the week Bush 43 expansion in the 2000’s with lower taxes ; infact the econ expansion ended with the average income LOWER THAN THE BEGINNING OF THE EXPANsion. Put in another way, Clinton created 23 million new jobs; Bush 43 ended with ZERO.
TexasTim65
TexasTim65
2 years ago
Reply to  oee
The economy expanded in the 60’s because America was still busy rebuilding Europe / Japan and the baby boomers were entering the workforce.
The economy expanded in the 90’s because of the incredible rise in productivity due to mass adaptation of computers.
The expansions in both decades had absolutely nothing to do with the president who was in power.
Here is US total employment. Note that in 2021 we still aren’t back to 2019. What happened in between? Covid. That explains everything. Jobs are essentially unchanged.
RonJ
RonJ
2 years ago
Reply to  TexasTim65
Not Covid, draconian Covid economic lockdowns happened. Covid itself was treatable with anti-viral drugs and other means to treat respiratory viral symptoms.
oee
oee
2 years ago
Reply to  TexasTim65
It is funny that Wrongwingers bragged about the Reagan econ when his econ was built by the Carter-Reagan military built up and low interest by Volcker. Once, the Cold war was over , there was no miliary build up and there was a reccession under Bush 41. If Fact , Dem Presidents have created 99% of the jobs from 1989! so there!
Call_Me
Call_Me
2 years ago
Reply to  oee
Believing heads of state create jobs belongs centuries or millennia in the past. In the U.S. in particular, the president doesn’t set economic policy, pass legislation, or run any businesses so it is beyond nonsense to think they are creating millions of jobs and you should stop considering that to be factual.
Call_Me_Al
radar
radar
2 years ago
Reply to  oee
No one payed those higher tax rates then because the tax code at the time allowed folks to write off everything. The tax code encouraged private investment. In 1986 Reagan redid the code to eliminate much of the write offs and lowered the brackets. Tax collections went up and the deficit has followed ever since.
Lisa_Hooker
Lisa_Hooker
2 years ago
Reply to  radar
Untrue, the Regan 1986 tax reform increased write-offs, especially for small businesses.
In 1987 the Congress revised his changes and took most of the new deductions away.
radar
radar
2 years ago
Reply to  Lisa_Hooker
Your memory is better than mine.
KidHorn
KidHorn
2 years ago
Reply to  oee
We actually lost both full time and part time jobs. The employment to population ratio is still below where it was pre covid. Some people look at numbers instead of headlines.
Captain Ahab
Captain Ahab
2 years ago
Reply to  KidHorn
Sadly, he is a victim of modern education. Notice how he credits Clinton with the growth in the 1980s, when the only thing growing was Clinton’s sinep. Newt’s Contract played a major role, and the global growth of technology as the Internet took off had next to nothing to do with the White House policies beyond not getting in the way.
Perplexed Pete
Perplexed Pete
2 years ago
1) Private banks create new, digital money when they lend.
2) Almost the entire money supply is created this way.
3) Banks only create the principal amount; but never the additional interest that is due.
4) Therefore, there is never enough money in existence to repay all the debt.
5) The total debt must constantly grow as more money must be created to pay interest.
6) The system traps everyone in an endless trap of debt servitude to private bankers.
7) And THAT is why the national debt keeps growing. It will not and cannot be repaid.
8) Proofs at bank LIES dot ORG
TexasTim65
TexasTim65
2 years ago
Reply to  Perplexed Pete
Points 3-5 assumes money that gets loaned out and paid back to banks gets destroyed and is never sent back into the economy. That’s clearly not the case.
Perplexed Pete
Perplexed Pete
2 years ago
Reply to  TexasTim65
That IS CERTAINLY the case. Banks create new money when they lend. When the principal is repaid, it is “extinguished”, meaning it ceases to exist. This means there is never enough money in circulation to repay all existing bank loans and the addition interest.
Here’s a quote from John B. Henderson, Senior Specialist in Price Economics from his 1983 CRS Report to Congress:
“Money is created when loans are issued and debts incurred; money is extinguished when debts are repaid. A loan from a bank CREATES A DEPOSIT which the borrower may draw upon for the payment of obligations…when that is returned to the bank it is withdrawn from circulation.”
This proof and many more are at bank LIES dot ORG
TexasTim65
TexasTim65
2 years ago
Reply to  Perplexed Pete
The LOAN is extinguished when it’s repaid, not the money itself. That’s what accounting is.
Banks do indeed create money when they lend, but ultimately *someone* has to hold all of that money all the time. Remember the bank isn’t a black hole, it’s owned by someone (individually or via stocks in a public company). If you extinguished their money they’d get quite angry.
Perplexed Pete
Perplexed Pete
2 years ago
Reply to  TexasTim65
You are mistaken. Bank loans create new, digital money. When the loan principal (money) is repaid, it is “extinguished”, meaning it vanishes from existence. German Professor Richard Werner studied banks and proved this in his 2014 empirical study. Even the Bank of England now admits that banks create most of the money supply by issuing loans, and that this money ceases to exist after repayment. Here’s a quote from the 2014 Bank of England publication, “Money Creation in the Modern Economy”:
“…the households and companies who receive the money created by new lending may take actions that effect the stock of money — They could quickly “destroy” money by using it to repay their existing debt, for instance.”
Captain Ahab
Captain Ahab
2 years ago
Yet again, the US Congress has disgraced itself. With a national debt of $31 trillion, why would a few more trillion matter?
My prediction: within five years, there will be guillotines on The Mall.
Mjs357
Mjs357
2 years ago
Reply to  Captain Ahab
Yesterday’s image of FJB collapsed like a frail elderly despot represents the US and global economies. All it’s going to take is a mysterious “sandbag” to trip it all up.
Perplexed Pete
Perplexed Pete
2 years ago
Reply to  Captain Ahab
Unlikely. But based on the debt charts at the St Louis Fed FRED website, I think the national debt will be well over $40 trillion in 5 years. The higher interest rates rise, the faster the national debt will accumulate as politicians scramble to generate more and more funds to cover interest payments.
And where do the lenders get the money borrowed by the government? It is all created out of thin air in the computers of private banks!
The only solution is to abolish the bank-controlled, debt-based money system.
Captain Ahab
Captain Ahab
2 years ago
Reply to  Perplexed Pete
The argument concerning ‘faux debt’ is won and lost at the margin. The closer we come to the ‘inflection point’, the more important the marginal change becomes. No one knows where the ‘inflection point’ is for a FAUX-debt-based money system. Note that not all debt is ‘faux’–sometimes, consumption is forgone to save part of ‘income’, the advantage of which is the inherent competitive balancing of demand and supply. While there may be minor disturbances/adjustments, it is essentially self-regulating.
With ‘faux debt’, we have added ‘faux interest rates’, unrelated to the true opportunity cost of lending/borrowing. It is the time bomb. Debt that was never obtained competitively, at an interest rate that is irrational at best (aka theft), should not exist. It also destroys the risk/return tradeoff for all assets. ‘Real’ debt becomes just as meaningless. It is ‘good’ while fortunes are made; however, it won’t last forever. A deep recession should be all it takes to generate sufficient pain for fiscal/monetary revolution.
Lisa_Hooker
Lisa_Hooker
2 years ago
Reply to  Captain Ahab
No fiscal/monetary revolution in our lifetimes.
Maybe in your grandkids.
Too bad, so sad.
Perplexed Pete
Perplexed Pete
2 years ago
Reply to  Captain Ahab
I wouldn’t call it “faux debt.” As long as the government uses violence and threat of violence to enforce tax debt and bank loans, the debts and the consequences of non-payment are very real.
We are forced at gunpoint to use dollars to pay taxes. But government doesn’t create dollars; only private banks do. So to avoid homelessness or imprisonment, we are forced to borrow from banks. And because it is mathematically impossible to pay off all bank loan principal plus the additional interest, this rigged system traps us in a perpetual cycle of involuntary servitude to private bankers.
WE DO know the inflection point! Swiss economist Peter Bernholz studied every hyperinflation of the 20th century (There were almost 30 worldwide). He found that hyperinflations are a near certainty when governments consistently spend more than 40% of expenditures on interest. So if you want to see if we’re nearing a hyperinflation or in a hyperinflation, keep an eye on the ratio between total government expenditures vs. government expenditure on debt-servicing. If the US hits a sustained level of over 40% expenditures on interest payments, hyperinflation is a near certainty*.
(*NOTE: The USA briefly exceeded 40% of total expenditures on debt servicing twice without there being a hyperinflation: 1943 and 2010. But both occurrences were for an extremely short time. For Bernholz’s 40% trigger to be accurate, the expenditures must be SUSTAINED ad infinitum.)
Matt3
Matt3
2 years ago
So fiscal policy will continue to be inflationary and debt will continue to grow. Path is to modestly change inflation calculation and hold interest rates low. Monetize the debt. This is best for debtors and US Government is the biggest!
Expect stagflation and fed to capitulate on the inflation fight. Inflation will be the policy.
Lisa_Hooker
Lisa_Hooker
2 years ago
Reply to  Matt3
If that is the case go long AR-15 kits.
GruesomeHarvest
GruesomeHarvest
2 years ago
You can’t take money away from power junkies. It’s the control of money from where their power flows. That is why inflation will always win in the great inflation/deflation debate. They will always print and spend; because, if they didn’t, they would have no power. And for these people power is everything.
Perplexed Pete
Perplexed Pete
2 years ago
Government DOES NOT print and spend. If government could create money, there wouldn’t need to be any national debt because they could create all the funds they need.
We are in endless debt because government gave away its money creation power to private banks long before your grandfather was born. Nowadays, all money is created by private banks. When banks issue loans, they create the digital money in their computer with no need for prior deposits or reserves. Almost the entire money supply is created this way. Banks only create the principal amount when they lend, so there is never enough money in circulation to repay all the loans plus the interest that is due. That puts the government and most of us in an endless debt trap to private banks. The only way to avoid default is to borrow more and more. And THAT is why the national debt keeps going up, year after year.
proofs at bankLIES.org
TheCaptain
TheCaptain
2 years ago
“Hopefully, this will keep spending bills on target and eliminate some earmarks.”
ARE YOU KIDDING? You cannot just slow down the energy source of a Ponzi scheme and hope it doesn’t collapse. In fact it must continue to accelerate. I know that seems difficult given we are in the straight up portion of the exponential debt curve but it’s either going to happen or the whole thing will collapse in a deflationary depression bigger than 29-32. Much bigger.
Casual_Observer2020
Casual_Observer2020
2 years ago
Reply to  TheCaptain
It can only accelerate for so long because of interest payments on the debt. Regardless of the debt deal, a larger percentage of federal spending is going to interest payments.
9TIMES9
9TIMES9
2 years ago
The idealistic and naive new government, IE America thinks it will not endure the basic premise and ingrained pathological behaviors of the human. This is what larger nations, IE thousand years nations, have already endured. And this insolent child, (United States) creates havoc, chaos, discord, death and mayhem. With its child like notions of what they want instead of what is. And everything the United States says, just like a child, is its projection of it’s own deficiencies, incompetence and lack for long term strategic mentalities. Its own lack of thoughtful thought. And traded for mere 3 month quarters. Just as a child only screams for its next bottle of milk to live another 24 hours. We will seek back in history and wonder why these brilliants could not reach basic conclusions based on historic references. The nations that have already endured and repeated multiple times will sit back and enjoy watching as these now grown, spoiled and desperate creators wallow in the decadence and superficial ideals they espouse.
Dr Funkenstein
Dr Funkenstein
2 years ago
Republicans fold once again like the French in 1940
GruesomeHarvest
GruesomeHarvest
2 years ago
Reply to  Dr Funkenstein
Let’s see if MacCarthy gets rolled as much as Trump.
Matt3
Matt3
2 years ago
Do they really get rolled or do the end up with the outcome that they actually want vs. what they say?
Captain Ahab
Captain Ahab
2 years ago
Reply to  Dr Funkenstein
The Republicans who resisted McCarthy’s elevation to Speaker were clearly aware of his inability to effect necessary changes. On the ineptitude scale, he is equal to Pelosi. Now, it is up to the moronic masses to respond negatively. Of course, they won’t. Most people can’t see beyond yesterday.
Lisa_Hooker
Lisa_Hooker
2 years ago
Reply to  Captain Ahab
Today is Yesterday’s Tomorrow.

Decorate Your Walls with Mish Fine Art Images

Click each image to view details or purchase in the store.

Stay Informed

Subscribe to MishTalk

You will receive all messages from this feed and they will be delivered by email.