January 3rd, 2025 -- America's Fiscal Doomsday

If Republicans shut down the government now, they face a self-inflicted triple disaster on the first day of the new congress.

I’ve been asked to provide more detail on the increasingly-likely “triple witching hour” facing Republicans next January 3rd when the new congress convenes in the middle of a government shutdown, a debt ceiling crisis, and a fight over the next House Speaker.

The government shutdown is familiar territory. It is shaping up to be eerily similar to what happened in 2018-2019 when Donald Trump scuttled a fully-agreed, bipartisan bill to keep the government open after it had been passed by the Senate on December 20th. While that was only a partial shutdown, it developed into the longest government shutdown in U.S. history.

To illustrate just how likely this is, consider what Trump had to say about the shutdown this morning. “If we don’t get it, then we’re going to have a shutdown, but it’ll be a Biden shutdown, because shutdowns only inure to the person who’s president.” That’s nonsense, of course, a species of magical thinking. If Trump is repeatedly and publicly demanding a shutdown and House Republicans give it to him, it’s going to be kind of hard to blame Joe Biden. On top of that, even if you could, who cares? Finally, it’s very possible that a shutdown would continue past January 20th. The 2018-2019 shutdown did. And it wasn’t complicated by a speaker fight.

Watching Republicans trying – and failing – to pick a designated driver for the clown car that is the House Republican caucus is also nothing new. In the past, it’s been mostly just embarrassing or amusing depending on what side of the aisle you’re on. This time, however, there is a twist that could prove deadly: Until the House elects a speaker, it can do no other business. It took three weeks to elect Mike Johnson.

Johnson’s speakership is now at serious risk in the next congress. By my count, Johnson can afford to lose just one Republican vote – and some Republicans have already come out against him. If he can’t get his carefully-negotiated budget compromise across the line and the government shuts down, he will be severely damaged goods. So it is looking increasingly unlikely that he’ll be elected speaker on the first ballot, if at all.

That means an extended period of paralysis. And that period of paralysis could be extended indeed if choosing a speaker is contingent on a deal to fund the government and a deal to raise the debt ceiling.

While the effects of a government shutdown will be immediate and ongoing, the debt ceiling crisis will be more of a slow-motion train wreck. On January 1, 2025 (because of a deal struck in 2023) the debt ceiling will be reinstated at whatever level of borrowing exists on that date. That means that the government will be immediately forced into extraordinary measures to stretch its existing cash and keep its debts current. Depending on a variety of factors, it could take several weeks or even months before we cross the Rubicon of debt default. Ironically enough, the government shutdown would actually provide some breathing room since the government would not be spending money on government salaries, etc..

What would happen immediately, though, is that credit rating agencies would take a hard look at America’s finances and possibly downgrade our debt rating. This would be a catastrophe all on its own since it would raise America’s borrowing costs and increase the national debt.

And there is a real possibility that Republican chaos would stall a debt ceiling bill even after Republicans elect a speaker. In the past, these negotiations have been some of the most difficult in Congress. They take time and even after there’s an agreement, the deal can still get held up for various reasons. In short, It’s very possible that Republicans could fail to raise the debt ceiling in time even if they want to.

Is it probable that this upcoming and unprecedented governing crisis will result in an American debt default? No. But the probability is not zero. Given what that would mean for America’s future, that’s unacceptable. There’s an 83% probability that you won’t blow your brains out but that doesn’t make playing Russian roulette an OK thing to do. Because that’s what Donald Trump and his Republican sycophants are doing by refusing to fund the government and risking an even bigger crisis: Playing Russian roulette with America’s future.