ROBERT SMITH, HOST:
We returned from vacation this week and found that the world as we know it seems like it is about to end.
KENNY MALONE, HOST:
We are not talking about nuclear war or natural disasters, although there is that, too. We're talking about the economic abyss because, somehow, with everything happening this summer, someone...
MALONE: ...Forgot to do the basic work of keeping the U.S. economy going.
SMITH: For instance, the fiscal year for the United States of America - it ends this month. And somebody - once again, Congress - has not yet written the new budget.
MALONE: Here's something else they didn't do. Our government needs to raise the debt ceiling, needs the authority to pay the bills that it has promised to pay. Or - no joke - the entire world economy will suffer.
SMITH: Congress has procrastinated and pushed off a whole bunch of issues that are all coming up right now. Right at the same time, you've got your flood insurance, children's health care.
MALONE: You've got immigration. You've got the authorization of the freaking FAA.
SMITH: Keeping the planes flying. September has turned into a sort of thriller. It's like the show "24," except with Treasury notes and continuing budget resolutions.
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MALONE: Hello, and welcome to PLANET MONEY. I'm Kenny Malone.
SMITH: I'm Robert Smith. The red numbers are counting slowly down to zero.
MALONE: Even President Donald Trump got concerned this week, brought together the leaders of Congress into the Oval Office, said, we have to do something. And he may have made the situation worse.
SMITH: Today on the show, we will take apart three of these congressional ticking time bombs. We will show you why each issue is so dangerous, why the hell Congress is taking so long and how it just might get resolved.
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MALONE: The blue wire. Cut the blue wire, Robert.
SMITH: It's always the red one.
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MALONE: Three huge congressional deadlines, three different issues. And the amazing thing is these are all traps that Congress has set for themselves.
SMITH: Let's start with the debt ceiling because talking about the debt ceiling drives me nuts. It is simultaneously both the most dangerous thing that Congress mucks around with. And it is the stupidest. Here's the way I like to think of it. Kenny, picture in your mind the most valuable thing in the world.
MALONE: The Hope Diamond.
SMITH: No. That's just in the millions of dollars.
SMITH: I don't know how much plutonium is worth. But I would argue that the most valuable thing in the world is the faith and the trust that people have in the U.S. government.
MALONE: Fine. But it's not as cool as plutonium.
SMITH: No, but it is worth $20 trillion because that is what people in this country and around the world have lent to the U.S. government. People have bought $20 trillion worth of government bonds because it is the safest investment in the world.
MALONE: It's true. The U.S. government always pays its debts.
MALONE: But every few years, Congress comes close to screwing this up when it faces this debt ceiling thing.
SMITH: The debt ceiling. The debt ceiling was a law passed by Congress a hundred years ago. And it said, OK, we should limit our debt to, at the time, a few billion dollars. And as the country grew, it had to keep erasing that number every few years and put in a higher one - currently at $20 trillion. We are very close - days away - to hitting the ceiling, coming up on this number really fast.
MALONE: And if the government hits that arbitrary limit, it can no longer borrow any more money. All of a sudden, the government would literally not have enough money to pay for everything it has promised to pay for. It couldn't pay the interest to those nice people who lent us money.
SMITH: Who trusted us.
MALONE: It might not be able to pay for government salaries or Social Security payments or pay for Medicare or Medicaid.
SMITH: We called up Ed Kleinbard. He's a professor at USC who has studied the debt limit - because we're hoping that he could help us make sense of this whole thing.
MALONE: Small problem, though.
ED KLEINBARD: It is completely senseless. It is a nonsensical concept. It is unnecessary for running the government. And the ultimately correct answer is just to get rid of it.
SMITH: I mean, here's how Ed puts it. Congress decides what the government is going to spend each year. That is its constitutional rule. And Congress also decides how much tax revenue it's going to bring in.
MALONE: Every year, Congress spends more than it takes in.
SMITH: By a lot.
MALONE: They know this, so, logically, they have to borrow money to make up the difference.
SMITH: They have essentially said, we need to borrow money. And yet Congress has to schedule an extra vote to raise the debt ceiling and borrow the money that they have already decided to borrow.
KLEINBARD: Many Americans misunderstand the debt ceiling and think that it is the driver of debt when it's not at all. It's not the driver of debt. It's just the result of spending. If you don't like the U.S. - the United States having a lot of debt, well then you should tell Congress to spend less or tax more. But the debt ceiling is just an artifact of that.
SMITH: And because the debt ceiling is a vote that has to happen no matter what, this allows any party to hold the country hostage until they get something that they want. In years past, it has been conservative Republicans specifically who didn't like some form of government spending. And they were threatening to vote against raising the debt ceiling. And then they extracted some concessions, and disaster was averted.
MALONE: This year, it appears it is the Democrats who are stalling raising the debt ceiling. As we record this right now, there's a deal in the works between President Trump and Democrats to put off the debt ceiling for three more months. But all that means is that we'll be talking about economic disaster scenarios again in December.
SMITH: It is, I have to admit, a pretty good bluff because if we do not raise the debt ceiling, if we default on U.S. debts, it'll be a global nightmare. The entire financial system of the world - banks, governments, retirees, institutions - all have at their foundation this really safe investment, U.S. treasuries. And if, all of a sudden, this is not the world's safest investment anymore, that's cause for panic.
MALONE: And here in the U.S., 40 percent of government spending is borrowed money. If we do not raise the debt ceiling...
KLEINBARD: Lots of people who expect to get paid one way or another will not get paid. And when that happens, you get a recession because, all of a sudden, if I don't have money for my salary as a government employee, for example, I can't pay my mortgage. I can't pay my grocery bills. And so it trickles throughout the economy - that, all of a sudden, income is missing.
SMITH: It's also stupid because it is unnecessary. Congress could just approve the borrowing when it approves the spending. But for some reason, they, year after year, shackle themselves to this debt ceiling time bomb.
MALONE: They do always diffuse it at the last second. But who knows? It's a different year. It's different Congress, different president. And it is worth noting, even if Congress takes us to the very brink of default and pulls back at the last moment, there is only so many times you can do that and keep the world's trust.
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SMITH: (Laughter) When I hear that sound, like, I feel like sweat pops out on my forehead. Am I sweating?
MALONE: You kind of are. You are.
SMITH: (Laughter) I'm a little bit shiny. OK. So Congress is sweating it out on this debt limit thing. But it is not the only thing on their plate. The second thing that they have to worry about right now, right this moment - in fact, they are behind schedule on it - is the federal budget.
MALONE: Here's how a budget is supposed to come together. Early in the year, the president presents his own budget, his priorities, his outline. The House and the Senate...
SMITH: They throw it in the garbage (laughter).
MALONE: Or they take it and then choose to ignore some of those priorities and take others. And each come up with their own budget.
SMITH: And those are essentially outlines. They don't have a lot of details in them because the details are figured out by subcommittees.
MALONE: Appropriation subcommittees - there are 12 in the House. There are 12 in the Senate. And then they divvy up the money. And then they're supposed to pass 12 appropriations bills in each. And then you have to sync all those up and make sure everyone's spending the same money. And all of this has to get done by the end of September, the end of the fiscal year. Unfortunately, it almost never comes together that way.
SMITH: We're all procrastinators here. Totally understand it. Except every few years that Congress is pushing it and pushing it - they're fighting over it, and they fail to fund themselves. And you've heard of this. They have to shut down the federal government.
SALLY JEWELL: It was one of the worst days that I had in the job.
MALONE: In 2013, Sally Jewell was secretary of the interior. That's the department that includes everything from the U.S. Geological Survey to the Bureau of Indian Affairs to the National Park Service.
SMITH: And almost as soon as Sally started the job - you know, she got her little ID badge. You know, and here's where the stapler is.
MALONE: Maybe she got a patch with a buffalo on it and a mountain in the background.
SMITH: So beautiful. But she also got word that, hey, you know what? You're going to need to make an emergency plan for the Department of the Interior because it is looking an awful lot like Congress is not going to manage to pass the bills that are going to fund the government for the upcoming year.
MALONE: And sure enough, within eight months of starting the job, it happened.
JEWELL: To me, it was just incredulity. I mean, like, is this really happening? We are actually shutting down the largest organization on the planet because people cannot get their act together to provide a budget to keep the doors open. I mean, what a waste of resources.
SMITH: Instead of doing their normal jobs, Sally's employees were being paid to, you know, shut down the Washington Monument before they were furloughed themselves.
MALONE: So they had to, like, drag barricades in to protect it and drain water fountains and lock bathrooms and put national park closed signs up for the poor, lost tourists.
JEWELL: For foreigners visiting our country, they said, well, what do you mean, your government has shut down? I mean, how do you explain that to, you know, a tourist from China who's been planning this trip for five years?
SMITH: The 2013 shutdown lasted for 16 days. It was one of the longest government shutdowns in recent history.
MALONE: And I was talking to one of our colleagues, Ron Elving. He's sort of like NPR's master of politics. And we're talking about this particular time bomb issue. And he said, you know, these kinds of shutdowns - they happen maybe more than you think.
RON ELVING, BYLINE: It is probably the best reason not to use the time bomb metaphor because...
ELVING: ...Because in the end, it is not really an explosion so much as it - you could call it an erosion of the things that people depend on the government for.
SMITH: In the last 40 years, there have been 18 different shutdowns because Congress could not agree on a funding plan. And many of those were just a day or two. And shut down - like, shut down sounds a little more harsh than it actually is because essential personnel do get to keep working.
ELVING: We didn't send home the air traffic controllers. We didn't bring all of our troops home from their far-flung missions around the world. And we didn't stop inspecting the meat - you know, that sort of thing. Now, if you did all those things - if all of the federal government's functions literally stopped, that would be a completely different animal.
SMITH: Instead the biggest impact of government shutdowns is usually political. You could make this very good argument that Bill Clinton - Bill Clinton got re-elected in 1996 because there had been these two big federal shutdowns, and people ended up blaming Newt Gingrich and the Republicans for them. And Bill Clinton actually came out of them looking pretty good.
MALONE: And Ron tells us that the shutdowns do serve a purpose. Every member of Congress has to make tough budget decisions, sometimes decisions that might look bad to their constituents back home. Being able to say, well, you know, I had to make a hard vote and a hard choice because the clock was running out. The government was going to shut down - that's something that constituents might swallow a little easier.
SMITH: So in that sense, it's not that the shutdown is a real, explosive, ticking time bomb. But it's kind of like a Hollywood time bomb.
MALONE: Yeah, because in Hollywood, the bomb is there to create suspense so that the hero can swoop in and save the day.
ELVING: And in a sense, that itself is metaphor for what Congress is doing here.
SMITH: Well, this answers a question I've always had, which is I've never understood why you have big, flashing, digital numbers on the bomb just to make it, you know, easier to diffuse for the hero. But, of course, like, the whole congressional process is all about the numbers. It's not the bomb. It's the numbers. It's beep, boop. Ten, 9, 8...
ELVING: Right. Right. Right. Well, that's for the audience, though, right? Because you're trying to make the audience feel suspense. You're trying to make the audience see consequences if the hero doesn't do something heroic. And that's an impression that they're trying to create in their political audience, much in the way the makers of thrillers are trying to get their audiences to sit on the edge of their seats.
SMITH: So, you know, in a normal year this could be brinksmanship and games and not have a severe impact. But, remember, this is not a normal year because as they are going through this budget process, they also have to do the first thing we talked about, debt ceiling. They have to do it at the same time.
MALONE: As of this recording, it looks like the deal that's coming together is going to push budget negotiations down the road into December. And so instead of getting to deal with each of these issues individually, Congress has taken two time bombs and made them one giant time bomb.
SMITH: And that's not all. There's one more huge issue they have to deal with. We'll talk about that after the break.
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SMITH: You know when you're watching a thriller, and sometimes one of the sidekicks gets killed off or weirdly, like, just disappears for no apparent reason, and no one really mentions it or makes a big deal about it? Julia DeWitt, will you take the empty seat that is now in the studio?
JULIA DEWITT, BYLINE: Nice and warm.
SMITH: Yeah, I don't know why.
SMITH: Julia is here to talk about the other huge thing that Congress has to deal with this fall, something we have put off dealing with for a long, long time. I'm referring to immigration or more specifically...
SMITH: DACA, Deferred Action for Childhood Arrivals.
DEWITT: So you've probably heard about this this week. DACA was this policy from the Obama administration that gave some protection to this one, like, really specific group of undocumented immigrants.
SMITH: Yeah, there were all these rules. You had to be under 31 years old. Your parents had to have brought you to the United States before you were 16 years old.
DEWITT: You also had to be, like, an exceptional member of society. So your criminal record had to be squeaky clean. You had to have been in or have graduated from high school or college or have served in the military and been honorably discharged. And then you had to apply for a DACA permit, pay a bunch of money.
SMITH: And what's amazing is, even though there were all of these hurdles, around 800,000 young people applied for this DACA protection. And it only lasted two years. You had to keep applying for it every two years. And what you got in exchange for going through all these hoops was your life changed in two big ways. You could stop worrying all the time because you were shielded from deportation. And you could work legally. You had a social security number.
DEWITT: Doing something for this group - for DREAMers, people eligible for DACA - is not actually that controversial on its own. What was controversial was the way Obama did it. Obama just went around Congress, skipped them.
SMITH: Well, you know, for obvious reasons because, as we have pointed out time and time again in this podcast, Congress has trouble getting things done. And they could not for the life of themselves solve this particular part of the immigration problem, even though they debated about it for over a decade because the fate of these DREAMers was tangled up in a lot of the other fraught immigration reform issues. And so everything just stayed in a big, tangled-up ball. And that's what Obama was trying to cut through.
DEWITT: Yeah. So in 2012, Obama was like, screw it. I might be voted out of office in a few months. I'm just going to do this thing. And with one stroke of the president's pen, DACA came to be. But what is created with the stroke of a president's pen can be undone with the stroke of a president's pen.
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JEFF SESSIONS: I'm here today to announce that the program known as DACA that was effectuated under the Obama administration is being rescinded.
SMITH: That's Attorney General Jeff Sessions from this past Tuesday. And Sessions and President Trump were pretty wily about this whole thing because they didn't just withdraw the DACA protections. They said, you know what? We're not going to let these protections start to expire for six months. So, Congress, you've been putting it off. You've been putting it off. You have six months to fix it yourself.
DEWITT: And DREAMers are pretty hard to demonize. On average, they were 6 years old when they came to this country. Like, some of them were in diapers.
SMITH: And the other thing is, you know, sort of by definition, the people who are covered by DACA were, you know, picked to be sort of these extraordinary members of the community. And so they have been extra-visible.
DARA LIND: This generation of kids themselves, having grown up in the U.S., has been more comfortable being out as unauthorized immigrants, more comfortable standing up for themselves, more comfortable interacting with American institutions than, say, their parents were.
DEWITT: That is Dara Lind. She's a reporter for Vox. And she's done a lot of really great reporting on this topic.
SMITH: We decided to bring in Dara because she wrote this great historical view of DACA and immigration as it affects these young people and really pointed out that the whole reason this was a problem in the first place was because of Congress, because of a string of unintended consequences that came from changes in immigration policy.
DEWITT: So it's 1996. Congress under Bill Clinton - they're in a mood to be tough on crime, tough on immigration. So they passed this law which makes it a lot harder to cross the Mexican border.
SMITH: Yeah. You know, more surveillance, more officers patrolling - this sort of thing. It was meant to reduce undocumented immigration. But Dara Lind says...
LIND: When you build a wall, you don't keep people out. You keep people in.
SMITH: The way Dara explains it is like this. For decades, people, mostly men, flowed back and forth between Mexico and the United States. They came for work. And then when the work was over, when they had enough money, they would go back to their families in Mexico. When Congress locked down the borders, people still came over. What was different was that it became too dangerous to come and go and go back and forth. So when undocumented immigrants - when men came here to work, they stayed. And they brought their family. They brought their young kids with them.
LIND: So what you end up having is a population of people who are semi-permanently unauthorized, even if they - as they develop ties to America and develop connections to American citizens but are totally rooted because they're stuck.
SMITH: So because of these, you know, probably well-meaning laws, there was this sort of generation stuck. It's estimated to be around a million young people at the time. They're generally in their 20s now. These DREAMers - they were stuck in this country, couldn't travel back and forth across the border and did not have a path to become legal immigrants. And even Trump himself has expressed sympathy for this DREAMer generation. And he just tweeted yesterday about how DACA recipients have nothing to worry about.
DEWITT: What Trump did this past week was actually pretty savvy. So he takes this whole mess. He gives it back to Congress.
SMITH: Where it started in the first place.
DEWITT: Yeah. And this time, it's got a time limit attached to it.
SMITH: Or, as we say around here, a ticking time bomb.
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DEWITT: OK. OK. Sound effects or not, it's going to be a really stressful fall for Congress. But it's also going to be a really stressful fall for all of us, for people who care about the economy and especially for the DREAMer generation.
SMITH: There is a very narrow path to success, which is possible, as long as they do not cut the red wire.
DEWITT: Wait. I thought you said we should cut the red wire.
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UNIDENTIFIED SINGER: (Singing) Tik, tok, tik, tok. Party time.
SMITH: If you are in New York City this weekend, you should come on over to the Now Hear This podcast festival Dara Lind her crew from Vox will be taping a live version of their podcast The Weeds on Sunday. We will also be there on Sunday performing feats of strength and skill. I'm serious here. We're taping that for our next podcast.
DEWITT: Send us emails - firstname.lastname@example.org. Twitter, Facebook - you know how this works. Our show today was produced by Sally Helm. Our editor is Bryant Urstadt. Our supervising producer is Alex Goldmark.
SMITH: Now that you're finished listening to PLANET MONEY, may we recommend another fine podcast from NPR? It's called Ask Me Another. It's a show featuring puzzles, word games and trivia played in front of a live audience. It is also hilarious. It is called Ask Me Another. You can find that on NPR One or wherever you get your podcasts. Oh, by the way, there's a note here in the studio left from Kenny Malone. And Kenny says, be sure and thank Kelsey Snell from The Washington Post for helping guide us through the world of politics. I'm Robert Smith.
DEWITT: I'm Julia Dewitt. Thanks for listening.
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UNIDENTIFIED SINGER: (Singing) Tik, tok, tik, tok.
SMITH: And so what I'm thinking here is - just so we have, like, a final scene. In the final scene, like, picture this, OK? The sun is coming up over New York City. And the camera sort of zooms in on Julia and I. We're dressed all in black. And we're sort of standing over an empty cubicle. And you could see in the background, it says Kenny Malone. And Julia, you - like, you put a bouquet of flowers down on the desk. And you say...
DEWITT: He would've like the end of the podcast.
SMITH: He would've. I like to think he's listening somewhere. And when we really need him, when Congress gets close to the cliff, he'll be back.
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