However you interpret the partisan dynamics of the latest debt limit ballet, it is incontrovertible that congressional Republicans have decided (or will conclude after yesterday’s vote) that debt limit measures are a less than ideal mechanism for fiscal guerilla warfare. So it’s an excellent time to close the door on such tactics with legislation to change the process for debt limit increases, as Eric Posner argues at TNR today:
Recently, several members of Congress, including Representative Mike Honda and Senators Barbara Boxer, Chuck Schumer, and Mazie Hirono, introduced legislation to do just that. The bills provide that when the national debt comes within $100 billion of the ceiling, the president may send a notification to Congress to that effect. Congress then would have a limited period of time during which it may issue a joint resolution that forbids borrowing above the debt ceiling. If Congress fails to pass such a resolution, or does but it is vetoed, Treasury may borrow beyond the debt ceiling. The bills make sense, and Congress should act on them as soon as possible.
You will note that the cosponsors of this legislation are all Democrats, so the big question is whether such legislation could ever draw significant levels of Republican support. That depends on whether it would be demonized by conservatives (many of whom persistently deny that a debt limit breach is inherently damaging to the financial system) depicting it as a mechanism for automating debt limit increases, and just as importantly, whether the business community might decide to insist upon it. It is sufficiently abstract to evade a lot of public attention if it is implicitly agreed debt default threats are too dangerous to be risked. And to the extent that such threats remain largely symbolic, the legislation leaves open avenues for debt-and-deficit demagoguery via “reverse veto” efforts to override a presidential action to raise the limit.
Where’s the financial titan or Wall Street Journal columnist who can help make this happen?