The world stands once again on the brink of disaster due to the self-imposed catastrophe that is the debt ceiling. And yet again, most of the media is behaving as if “negotiating” over raising the debt ceiling is a standard and responsible part of governance rather than an unnecessary concession to an absurd and malevolent act of hostage-taking.
Let us begin with the obvious: the federal debt ceiling should not exist. It is a landmine that could blow up the financial system for no good reason. It is an insult to good governance, and negotiating over it only encourages the most nihilistic and ruthless forces in government. The federal government’s debt limit is not like a family’s credit card limit. If you use a credit card at a store after you reach the limit, your card will be rejected, and your spending limited. But when Congress sets a debt limit, it doesn’t set a limit on spending at the same time. To the extent that America’s financing system is akin to a national credit card, all the debt limit does is foolishly create the possibility of the United States government failing to make its card payments and destroying its credit rating.
Furthermore, the federal government’s budget is nothing like a family household budget. A family can’t print its own money. And a family wouldn’t wreck the financial stability of its neighbors if it missed a credit card payment.
Imagine that Uncle Bob doesn’t like how his family spends money. Bob doesn’t want to spend on a double stroller for the new twins or insulin for the cousin with diabetes. Bob wants an AR-15 for his collection, and he resents having to help pay for the necessities of his nieces and nephews. Bob’s selfish priorities are reckless and unpopular in the family. Should Bob get to set the budget? Should Bob get the family credit card? Should Bob get to threaten the livelihood of not only his family but the entire block if he doesn’t get his way?
That is what is happening with the debt ceiling. That is why organizations from the left to the right to the middle want to abolish it. It is why many Democrats (President Biden’s reticence notwithstanding) have again pushed to eliminate it. It is why from 1979 to 1994, and then again during short periods of Democratic governance after that, the so-called “Gephardt Rule” existed to automatically deem the debt ceiling raised to the limit of the budget that was just passed.
As their party has descended further into extremism, Republicans have not been shy about taking the world hostage over the debt ceiling, attempting to secure by economic terrorist threats what they could not secure through regular order. Our conservative Uncle Bob has a tender concern about deficits but curiously never considers tax increases on the obscenely wealthy to reduce deficits. Republicans do not prevent their own party’s presidents from expanding deficits by lavishing money on their donors and interest groups. Agreeing to “negotiate” under these terms has always been a fool’s errand.
My own Washington Monthly colleague Bill Scher argues that in this case, negotiating the debt ceiling might not be a bad outcome: GOP House Speaker Kevin McCarthy, he argues, is not making the same sort of demands as his predecessors, and the economy would supposedly not suffer as much from economy-cooling cuts as they might have in past years.
Unfortunately, even if these assumptions were correct, negotiations seem likely to produce substantially worse outcomes. The demands of the GOP caucus are drifting farther and farther to the right, such that few Democrats could support a “deal” in good conscience. This is not surprising: McCarthy is not in control of his caucus. With only a handful of votes to spare, his caucus is functionally under the control of not only garden-variety Tea Party types but nihilistic bomb-throwers like Representatives Matt Gaetz, Chip Roy, Marjorie Taylor Greene, Paul Gosar, and Lauren Boebert. McCarthy can’t even afford to hold George Santos accountable lest he lose that crucial vote. Negotiating with leaders who cannot deliver on their own terms is impossible.
President Biden has been signaling recently to progressive groups that he is unlikely to pursue novel alternatives to hostage negotiations like invoking the 14th Amendment or minting an expensive coin— because courts stacked with conservative judges may be unlikely to support him. But these signals only embolden the far right to make more demands.
The economic argument for allowing Republicans to engage in these shenanigans is also unconvincing. Amidst an unprecedented housing affordability crisis, it is perverse to expect the most vulnerable individuals on the fringes of the economy to bear the brunt of macroeconomic measures to curb inflation and deficits. Instead, corporations and the ultra-wealthy, who have significantly profited from COVID disruptions and asset value increases, should bear the responsibility.
The consequences of the multi-year spending cap that Republicans are insisting on as their “moderate” offer would be brutal and devastating. The GOP hardliners are increasingly emboldened. If McCarthy cannot get the votes for it from his own caucus, Democrats should certainly not provide the votes to help him. Latest reports indicate that Biden is trying to secure 100 Democrats to vote for a debt ceiling increase that will likely be unpopular with their constituents, even as Republicans are at liberty to vote against the very cuts they demanded. This is perverse.
But the most important reason to ditch the negotiations is one of principle and precedent. The debt ceiling should be taken off the negotiating table. It is arguably unconstitutional, the Treasury Department alone can evade it, and every time Republicans extract unearned policy concessions it emboldens them to do it again.
If a budget-slashing cave-in is truly the only option to avoid default then, at the very least, eliminating the debt ceiling as a hostage in the future must be one of the demands Democrats get in the trade. This should not be happening now, and cannot be allowed to happen again. The time has come to say “no” to the hostage takers and pursue every other option possible. Biden should strongly signal that he is willing to pursue these alternatives, and do everything possible to force the GOP into passing a clean increase to avoid default.