Americans have their noses on the window of yet another crisis – the recurrent congressional drama over the federal debt ceiling.

If the cap is not raised, we are warned that the federal government will default. But the store beyond the window is an illusion – the horrors of a cashless government only materialize if the Biden administration and the Federal Reserve are willing.

The two political parties argue like dysfunctional spouses – live on television during the day.

Democrats in Congress and pundits argue they helped raise the cap when Republicans were in power. You have to pay for the programs and commitments already in place, and if the cap is not raised, social security benefits will not be paid, the Navy would be stranded at sea and so on.

Much of it is nothing more than demagoguery and hysteria – call Dr. Phil.

Under the current law for fiscal year 2022, the Congressional Budget Office estimates that the government will spend $ 5.5 trillion, but will only receive $ 4.4 trillion. Over the next decade, annual increases in public debt would average $ 1.3 trillion.

If Congress doesn’t raise the debt ceiling, the treasury will have money, but not enough for everything. It could prioritize interest on the national debt, Social Security benefits, the military, Medicare, Medicaid and other benefits for mothers and young children.

Federal law enforcement and prisons would need funding. Still, bureaucrats from the FTC and the Justice Department’s anti-trust and civil rights divisions could be fired, along with most other government agencies.

How nice it might be for local school boards, universities, and state governments not to receive further tenure from Washington for the duration.

Funding could be suspended for regional agencies like the Appalachian Regional Commission, which tend to rely more on federal programs than economic development. And for NPR, which is endowed and richer than many private broadcasters and cancels out conservative votes.

Overall, it would look like a government shutdown following the failure to pass a continued resolution as happened during the Obama administration.

With interest on existing debt paid and federal spending forced to break even, the Treasury can issue new bonds to replace maturing ones, as it always does. Alternatively, the Federal Reserve could buy back maturing debts and finance those purchases by selling Treasuries on its balance sheet, with longer maturities.

The S&P could downgrade US debt, as it did in 2011, but some debts cannot be rated. Since the US government can print money to pay off its obligations, the real risk is currency depreciation through overspending, permitted by the Federal Reserve, and inflation. As of March 2020, the Fed has printed $ 4.3 trillion to buy U.S. Treasuries to help fund $ 5 trillion in pandemic relief and stimulus spending.

Improved pandemic entitlements – for example, the refundable children’s tax credit, more extensive food stamp checks, rent assistance, and larger insurance subsidies under the Affordable Care Act – contributed to a decline in the participation rate of the adult workforce and to labor shortages, excess power spending and soaring inflation.

Making this kind of overspending permanent could spell stagflation, really engender fears that the value of U.S. Treasuries could be eroded by 1970s inflation, raise borrowing costs and create the mother of all crises. budgetary. Then, half of all American households that do not pay income tax should join the upper middle class and the rich by paying duties like Europeans do.

Many of the reconciliation bill’s programs have expiration dates within the 10-year tax funding window that will be difficult for future congresses – whether Republican-controlled or Democratic-controlled – to drop. Even the reduced reconciliation program will push the annual deficit to at least $ 1.6 trillion.

Majority Leader Mitch McConnell and Republican Senators Should Agree to Raise Federal Debt Ceiling Just Enough to Allow $ 1.3 Trillion Federal Deficit As CBO Projects Current Law, Not A Dime More .

It may require a government shutdown to get the job done, but unlike the 2013 affair, properly explained Republican actions could be a political asset.

The GOP must defend the fiscal reason.

To get there, however, the Republican Congressional leadership needs therapy.

To pass the recent $ 1,000 billion infrastructure bill, the GOP provided President Pelosi with 13 Republican votes when six progressive Democrats balked at supporting the measure. Minority Leader Kevin McCarthy got nothing in return – something that has happened at other times in the past.

Sadly, Dr. Phil is dealing with family matters, not tax policy and hard politics.

I’m a doctor too, I have a couch and would love to hold their hand.

• Peter Morici is an economist and professor emeritus of commerce at the University of Maryland and a national columnist.