The most tedious topic in American politics is back, thanks to the Republicans who regained control of the House of Representatives in the 2022 midterm elections.

Over the next six months or so, you will be hearing about the debt ceiling tie that could torpedo the US economy. This is not a natural phenomenon or market abnormality that we have no choice but to deal with. It is a man-made construct that once served a purpose, but has now become a mechanism for the abuse of the majority by a radical minority.

Since 1917, Congress has set a limit on the amount of money the federal government can borrow. Federal spending and the loans that finance a portion of it typically increase over time, so Congress has to increase the loan limit every two years. This used to happen routinely, without fanfare. But over the past 25 years, Republicans have become increasingly militant, using their votes on a debt-ceiling extension as leverage for other political demands.

That’s what they plan to do, again, in 2023. The Treasury Department. says it will reach the borrowing limit of $31.4 trillion on January 19. If Congress simply voted to extend the borrowing limit, nothing remarkable would happen. But the Republicans who now control the House say they will only raise the debt limit if Democrats agree to major spending cuts, which the Democrats won’t do. So the showdown is on.

For several months, the Treasury can use “extraordinary measures” to shuffle money and pay the nation’s bills, including interest payments on government securities, Social Security and Medicare outlays, and a host of other obligations. The real crisis will come sometime near early summer, when the Treasury exhausts these extraordinary measures. At that point, you could only cover the bills with incoming tax revenue, leaving some of them unpaid. Economists believe that even a small default on US government obligations would trigger a financial earthquake.

Here are three basic things to know about this unnecessary drama.

1. It is nothing more than a political stunt. Always has been. It will always be. Republicans paint themselves as fiscal hawks disgusted by bloated government and the $31 trillion national debt. They will demand spending cuts as a condition of voting for a higher debt limit. And they are not mistaken about the huge mismatch between the amount Washington spends and the amount coming in through federal revenue, creating a Deficit of 1.4 trillion dollars in 2022.

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But Republicans are simply not serious about closing the deficit or reducing the national debt. If they were, they would support a strong Internal Revenue Service that collects all the taxes Americans legally owe and try to shut down the “tax gap” of up to $1 billion per year. Instead, Republicans who controlled one or both houses of Congress underfunded the IRS for a decadeleaving him unable to keep an eye on the complex and perhaps fraudulent tax returns from wealthy taxpayers like Donald Trump. Last year, the Democratic-controlled Congress approved an additional $80 billion in IRS funding over the next 10 years, to offset years of funding cuts. One demand from House Republicans now is to cancel that new funding.

If Republicans really wanted to reduce federal deficits, they would propose spending cuts where most of the money is. But you won’t be hearing that from them this year. Three top spending categories they are Social Security, defense and Medicare, which account for nearly 50% of all federal spending. Republicans often view advocacy as off-limits. There are occasional rumors about cuts to Social Security and Medicare, but these are popular programs and only a handful of Republicans are willing to risk voting in anger. What the Republicans want to cut is Medicaid, which primarily serves the needy, along with the much smaller budgets for so-called discretionary programs like transportation, education, housing, and a myriad other things. Those programs are bullshit, in terms of where you could find real savings if you were serious about it.

The Democrats, for their part, play their own political game with the debt ceiling, which consists mainly of standing aside and letting the Republicans show their recklessness. The Democrats could have extended the debt ceiling until the end of 2024 during the unconvincing session after the midterms, when they still controlled Congress. They didn’t, probably because they thought Republican threats to break up the government in 2023 would alienate voters. They are probably right about that. Right on cue, President Biden has started calling out Republicans who deny the debt ceiling.”fiscally insane.” Democratic self-righteousness is part of the usual script.

US House Speaker Kevin McCarthy (R-CA) speaks to members of the media outside a Republican Steering Committee meeting in the US Capitol building in Washington, US , on January 11, 2023. REUTERS/Leah Millis
US House Speaker Kevin McCarthy (R-CA) speaks to members of the media outside a Republican Steering Committee meeting in the US Capitol building in Washington, US , on January 11, 2023. REUTERS/Leah Millis

2. Congress will eventually raise the debt ceiling. It always does, allowing more and more loans.

3. But the process of getting there could cause real damage. The worst example of this occurred in 2011, when Congress approved a debt ceiling extension just hours before the Treasury failed to make some payments. That followed months of disputes similar to those likely to occur this spring. The near default prompted Standard & Poor’s to cut the US credit rating by one notch for the first time in history.

The shares began to fade about 10 days before the default date that summer. Then they collapsed after the S&P downgrade. By mid-August, the S&P 500 Index had fallen 17% from its July high. It took the market six months to recoup those losses.

Republicans are signaling that they might be willing to repeat 2011 in 2023, which is likely to cause some anxiety in the market until Congress resolves the issue. “Raising the federal debt ceiling later this year will require a bipartisan commitment, most likely involving steps to modestly reduce the budget deficit,” Capital Economics advised in a Jan. 17 analysis. “But a deal probably won’t be reached until the last minute, raising the risk that the deadline to lift the ceiling will be inadvertently missed.” Why cultivate calm when you could sow chaos?

Rick Newman is a feature columnist for yahoo finance. Follow him on Twitter at @rickjnewman

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