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J. Scott Applewhite/AP Photo
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Welcome to X-Date, a pop-up newsletter about the perilous debt ceiling talks in Washington. Every day until there’s some resolution or another, the Prospect
will bring you news and analysis and the latest status. The name comes
from the term of art used to describe the date at which the government
will run out of borrowing capacity. Treasury Secretary Janet Yellen recently announced that this would occur on about June 1; that’s the so-called "X-date."
Here at the Prospect, we’re watching this with more than a little trepidation.
Remember that the debt ceiling doesn’t have anything to do with the budget per se.
It’s simply a legal anachronism dating to the First World War, where
Congress has set a cap on the national debt. So when taxing and spending
policy is passed that would require more borrowing than the cap—which
happened last December—it has to pass another law lifting the cap. (If
that sounds crazy, it is, and no other country operates like this.)
Democrats
and President Biden have so far been clear that they will not accept
anything other than a clean increase. Threatening to default on the
national debt—which has never happened and would cause a global
financial crisis—to extract policy concessions is not a good-faith
negotiation; it is legislative terrorism. And of course, the debt
ceiling was raised without concessions multiple times during the Trump
and Bush administrations.
Yet it seems highly unlikely that House Republicans are going to pass such a bill. House Speaker Kevin McCarthy just barely
managed to get a small debt ceiling increase out of his caucus by, as usual, granting the extreme right of his caucus everything it wanted—including
reducing the overall budget to 2022 levels, repealing extra IRS
funding, adding work requirements to Medicaid and food stamps, and
repealing the Inflation Reduction Act’s green-energy tax credits. Even
with that, he still lost four votes.
Now, the president has extended an invitation
to McCarthy and Senate Republican Leader Mitch McConnell, along with
Democratic leaders in Congress, to a meeting next week. While formally,
Biden remains steadfast, this
is clearly the opening salvo in what can only be described as a
negotiation.
To
set the stage for the next month of bitter acrimony, let’s recall the
recent history of how we got here. Republicans are of course to blame
for taking the debt ceiling hostage, but Democrats had multiple chances
to at least attempt to take that possibility off the table and didn’t do
it. |
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First,
as a structural matter, Democrats controlled the House and the Senate
during the last Congress, and
could have passed a law at any time removing the debt ceiling on a
party-line vote, or raising it to an astronomical number. Of course,
that would have required getting rid of the nonsensical Senate
filibuster, but that also could have been done on a party-line vote. Yet
a critical mass of terminally Senate-brained Democrats refused to do it.
Even
with the filibuster, Democrats still had opportunities to deal with the
problem. The last time the ceiling was raised was at the end of 2021,
when they pushed it up to its current figure of $31.4 trillion as part
of a reconciliation package. Some simple arithmetic showed that this
mark would be reached in 2023—after the midterms in which Republicans
were expected to do well. It was entirely predictable that if
Republicans took control of either the House or the Senate, they would
take the debt ceiling hostage. Not only did they do exactly that during
Obama’s presidency, twice, today’s Republican caucus is dramatically
crazier than it was back in those days.
People said at the time that this was grossly irresponsible. Look no further than my colleague David Dayen, who wrote:
"They could raise
it by a bajillion kajillion dollars. They could raise it enough to
ensure borrowing headspace for the next hundred years. Instead, the plan
is to hand over a loaded gun to Republicans in 2023."
Crucially, Democrats had an opportunity to use a 2023 budget reconciliation bill
to raise the debt ceiling. This would only require a simple majority in
the Senate. Reconciliation was used to raise the debt ceiling four
times in the 1980s and ’90s. The lame-duck session of 2022 was the
perfect opportunity to pull off this maneuver.
By this time, Republicans were openly stating
their plans to take the ceiling hostage so as to enact massive cuts to
Medicare and Social Security. But Senate Majority Leader Chuck Schumer
didn’t even try to counteract this, as Dayen again reported.
They "decided to do nothing to neutralize the greatest threat to the
economy next year: the debt ceiling, and the crisis House Republicans
are sure to create over it," he wrote.
Would
it have been difficult to get Sens. Joe Manchin (D-WV) or Kyrsten
Sinema (formerly, D-AZ) on board for such a bill? Indubitably. Would it
have required concessions? Possibly. Would those have been worse than
what McCarthy and McConnell have cooked up? Absolutely not. Yet Schumer
made no effort to even inquire about this possibility. |
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Democrats now have two options: either a discharge petition
in the House, or executive action. On the former, if 218 House members
sign a petition, a bill can be brought to the floor without needing
leadership approval. House Democrats actually did sneakily file a bill back in January
filled with tons of minor items so it could be distributed to every
committee, which could then serve as a shell for a debt ceiling
increase. This gets them past a requirement that any discharge petition
must come on a bill that sits in committee for 30 days. However, the
House is out of session this week, it takes time to collect signatures
once the House comes back, and even if Democrats manage find the support
of five Republicans and reach 218 signatures, then the petition must
sit another seven
legislative days, giving almost no time to accomplish the feat before
the X-date. (The best system of government in the world, folks.)
Executive
action would be a lot cleaner and simpler. President Biden could
declare the debt ceiling unconstitutional (citing the plain language of
the 14th Amendment) or mint the famous trillion-dollar platinum coin to obtain more spending power (since federal law allows
the minting of platinum coins of any denomination), or simply say that
because Congress has given him conflicting legal instructions he is
going to pick the option that doesn’t cause an economic crisis.
Reporting indicates that the administration is divided about all these options.
This
anxious hand-wringing over what should be a cut-and-dried constitutional
issue is symptomatic of Democrats’ approach to the debt ceiling in
general. They, along with mainstream media coverage, helplessly validate
the framing of the ceiling as an ironclad legal obstacle, when in
reality it would be every bit as illegal for Biden to respect it as
ignore it. After all, Congress passed a budget in December funding the
government through September requiring
him to spend at defined levels. Yet this law is treated as somehow less
valid than the constitutionally questionable debt ceiling.
At any rate, we at the Prospect will be watching the situation carefully to keep readers informed of developments as they come in. |
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