DEBT CEILING OCTOBER 11, 2013
The debate over funding government and avoiding default has officially reached the chaos stage. By my count, no less than four separate conversations are taking place right now: The White House is talking to House Republicans and, separately, it to Senate Republicans. In the Senate, moderate Republicans are talking to the Democratic leadership. In the House, Republicans from the party’s extreme wing are talking to Republicans from the not-so-extreme wing, all under the watchful eye of the caucus leaders. And that’s just the official dialogue. Staff and outside interest groups are talking amongst themselves. The subject of these talks include myriad variations on how to write a bill reopening the government and giving it new borrowing authority, for different durations of time and under different conditions—or no conditions at all. (That’s the way the Democrats want it and, I suspect, where this debate will finally end up, more or less.) If you tried to draw a flow chart, mapping out the different ways the debate could play out, it’d look like a plate of spaghetti.
But what continues to fascinate and bewilder me is the one idea nobody seems to be discussing: Abolishing the debt ceiling. It threatens American credit-worthiness and, by extension, threatens to undermine both the U.S. and world economies. But there’s no particularly good reason for it, for reasons Brad Plumer reminds everybody today:
Back when Congress enacted the statutory debt limit in 1917, it was arguably a useful device for Congress to prevent the president from spending however much he pleased. But since 1974, Congress has created a formal budget process to control spending levels. The debt ceiling doesn't do anything to determine the level of spending. It only allows the Treasury Department to pay for bills Congress has already racked up.
Abolishing the debt ceiling could take two forms. One would be to restore the old Gephardt Rule, named for former House Democratic Leader Richard Gephardt. Under that rule, the debt ceiling increased automatically when Congress passed its budget—a perfectly logical setup. The Republicans repealed the Gephardt rule in 2011, when they took power. Reinstating it could be part of whatever agreement ends the current impasse. The other possibility would be to enshrine, permanently, the arrangement Mitch McConnell developed for raising the debt ceiling last time. It became known as the McConnell rule. As Norman Ornstein, the American Enterprise Institute congressional scholar, recently explained:
The 'McConnell Rule,' as it was called, allowed the president unilaterally to extend the debt limit, while also providing for a congressional resolution of disapproval. If both houses of Congress disapproved of the president’s action, the resolution would be sent to the president. He could veto it—but it would take two-thirds of both houses of Congress to override his veto.
In principle, making the McConnell rule permanent should appeal to both the president and his political adversaries. Obama wouldn’t have to worry about debt ceiling crises anymore, while Republicans would get to keep taking votes castigating Democrats for borrowing money. Of course, Republicans would be giving up the ability to use the debt ceiling as a negotiating ploy. But if the polls are right, the ploy doesn’t actually work. Getting rid of the debt ceiling would take a political gun out of Republican hands—and save them from turning it on themselves.