Right after the Senate’s bipartisan cloture vote to end the filibuster of a short-term debt limit increase, Senate Majority Leader Chuck Schumer said:
Today’s vote is proof positive that the debt limit can be addressed without going through the reconciliation process . . . The solution is for Republicans to either join us in raising the debt limit or stay out of the way and let Democrats address the debt limit ourselves . . . Senate Democrats want a long-term solution to the debt limit to make sure financial markets remain stable and our economic recovery stays on track. America’s full faith and credit must never be used as a political bargaining chip.
Schumer is right to insist on a long-term solution, but he is dismissing the easiest way to get one: reconciliation. Republicans have been demanding that Democrats use the procedure to fix the crisis Republicans themselves created. Democrats don’t seem to want to go there.
Frankly, this Democratic reluctance is weird. Democratic leaders are eagerly pursuing reconciliation—the restrictive yet filibuster-proof legislative procedure—to pass a multi-trillion-dollar bill designed to improve the economy. Yet they don’t want to use reconciliation to pass a simple bill that costs nothing, acknowledges the inevitability of our borrowing more, and prevents the implosion of the economy now and in the future. Huh?
I admit that perhaps nobody has been as annoying—even borderline delusional—about the importance of bipartisanship than I have. And even I can see the foolishness in expecting bipartisanship to raise the debt limit.
Any Democratic decision about handling the debt limit should start from this fundamental truth: The debt limit is stupid. Even if you are a fiscal conservative, the debt limit does not limit the debt carried by the federal government. The debt limit—if we were ever reckless enough to hit it—only prevents the Treasury Department from issuing debt, such as Treasury bills and notes, to pay the federal government’s outstanding bills. Since we never want to fail to pay our bills and destroy the full faith and credit of the American government, why have a debt limit at all? No other government in the world has such a ridiculous policy.
Sometimes politicians keep stupid policies around because they serve other purposes. The “must-pass” nature of debt limit increases makes it a tempting target for brinksmanship. Most infamously, in 2011, congressional Republicans held up a limit increase to extract budget-cutting measures out of President Barack Obama. Then-and-now Senate Minority Leader Mitch McConnell said soon after, “I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn’t think that. What we did learn is this—it’s a hostage that’s worth ransoming. And it focuses the Congress on something that must be done.”
But Democrats took away a much better lesson from that debacle: Never let the debt limit become a bargaining tool. In 2013, when Republicans tried to use the rapidly approaching debt limit—combined with a two-week government shutdown—to force Democrats to delay implementing the Affordable Care Act, Democrats refused to offer concessions. The debt limit was not only raised on a bipartisan vote but also was linked to an agreement to revisit the 2011 deficit reduction deal, which was soon scaled back.
This year, Democrats stuck to that principle; last week’s short-term debt limit increase involved no policy concessions. But McConnell said after the vote, “I will not provide such assistance again if your all-Democrat government drifts into another avoidable crisis”—meaning that Republicans would not supply the votes for cutting off a filibuster come December, when another hike in the debt ceiling will be needed to stave off default. So Democrats can either play another round of chicken to see if McConnell blinks, offer the Republicans policy concessions, or solve the problem themselves, which—as McConnell correctly, if obnoxiously, points out—Democrats can do.
Democrats can raise the debt limit through reconciliation. It has been done four times before. Better still, they can render the debt limit meaningless through reconciliation by raising the limit to a comically gigantic number. (The only other country to have a statutory debt limit, Denmark, essentially adopts this approach.) Currently, the limit sits at just under $29 trillion. That’s 12 zeroes. How about one googol dollars? That would be 100 zeroes. Or one googolplex dollars? That would be a googol of zeroes.
After that, the problem is solved: no more anxiety-inducing debt limit crises. No more dysfunctional debt limit hostage situations. No more mind-numbing debt limit explainers.
Other short-cut solutions have been floated. My Washington Monthly colleague Garrett Epps and the former Republican congressional aide Mike Lofgren have argued that the Fourteenth Amendment—which commands, “The validity of the public debt of the United States, authorized by law . . . shall not be questioned”—gives the president and the Treasury Department the authority to ignore congressional constraints and simply pay any debts. Economics writers including Paul Krugman and Joe Weisenthal have called on the Treasury to mint a $1 trillion coin, to pay off debt quickly and keep us under the limit.
But both options would be subject to legal challenge. (President Obama briefly considered such options and was warned of the legal risks.) Whatever your view of the chances of such challenges succeeding, the legal limbo would inflict damage on the full faith and credit of the American government.
Treasury Secretary Janet Yellen also argues that minting a $1 trillion coin “jeopardizes the independence of the Federal Reserve” and would amount to “print[ing] money to cover the deficit.” Some would counter that that’s a feature, not a bug. But at a minimum, the coin strategy sparks a new set of needless controversies when a legally and constitutionally unassailable option is readily available.
Democrats understandably didn’t jump at the reconciliation option last week. As Senate Majority Whip Dick Durbin explained in late September, meeting the procedural requirements to draft and pass a reconciliation bill separate from the work-in-progress Build Back Better bill would take “three or four weeks of activity in the House and Senate.”
Democrats didn’t want to pursue the partisan reconciliation path earlier because ideally they would rather share debt limit responsibilities with Republicans. Otherwise, Republicans will disingenuously and hypocritically weaponize the debt limit vote in their upcoming congressional campaigns to accuse Democrats of being profligate—conveniently ignoring that Republicans always raise the debt limit themselves when they control Washington.
Another wrinkle is that Democrats cannot “suspend” the debt limit in reconciliation, because reconciliation measures have to be budgetary changes, not policy changes. Suspending the limit has been the more politically comfortable option lately because it avoids going on record in support of a specific amount of allowable debt, which can easily show up in campaign attack ads. Democrats wanted to try to jam Republicans into accepting a bipartisan suspension. But that didn’t quite work. Democrats only got Republicans to take a short-term hike, not a suspension, of $480 billion.
And now, Democrats have more than three or four weeks. They can’t count on Republicans to help out again. It’s time to end the political theater and start governing like responsible adults.
If Democrats were so concerned about being attacked as big spenders, then they shouldn’t have tried to pass giant spending bills: first, the enacted American Rescue Plan (nearly $2 trillion in deficit spending) and now the pending Build Back Better bill (which despite its trillion-dollar-plus price tag might not add to the debt, thanks to higher taxes on corporations and the wealthy).
Democrats decided a while ago that it was worth the political risk to pass big bills that deliver real results. If they can’t defuse a debt limit attack, then their plan to run on the passage of giant spending bills wasn’t going to pay off politically in the short run anyway.
But there is a straightforward two-pronged response Democrats can use to counter attacks. One, they can note that Republicans routinely raise the debt limit when they are in power. Two, Democrats don’t want chaos every time the debt limit approaches; they will be able to say that, when faced with a source of chronic, maddening, and inexplicable Washington dysfunction, they fixed it.
McConnell, in a snippy letter to Biden last week, said, “Your lieutenants on Capitol Hill now have the time they claimed they lacked to address the debt ceiling through standalone reconciliation and all the tools to do it.” Democrats might not want to accept this observation from Washington’s most cynical political creature, but McConnell isn’t wrong. Solve the problem, Democrats. And maybe, just maybe, the voters will respect you for being the grown-up.
