Now that we've managed to – again – reset the clock on the economic time bomb known as the debt ceiling, how about defusing it entirely? Let's get rid of the thing, or at the very least rewire it so that an explosion must come from action rather than inaction.
Debt ceiling proponents say that it has the virtue of requiring the country to assess and earnestly discuss our fiscal situation. But most economists agree that failing to raise the debt ceiling would have catastrophic consequences. So the "conversation" logic is akin to saying that keeping a ticking firebomb in your house is a good idea because the occasion of pushing back the time it will explode forces you to have serious discussions about fire safety.
How about having the discussion without the forcing mechanism of catastrophe? Because here's the thing: We do. We talk about the deficit, debt and fiscal situation in Washington endlessly. A whole cottage industry of deficit scolds has grown up (see, for example, Fix the Debt, the Concord Coalition and the Peter G. Peterson Foundation). More broadly, establishment Washington has come to fetishize the notion of a "grand bargain" in general and a willingness to cut entitlements specifically as a sign of intellectual seriousness.
That isn't to say that we shouldn't discuss our fiscal situation or be concerned about medium- and long-term deficits – though the willingness of the right to use long-term fiscal concerns as a reason to pursue economically dangerous cuts has, as Pat pointed out yesterday, cost us 1.2 million jobs since 2010. But the idea that we need to keep the debt ceiling around as a spur to talk about the deficit and debt simply ignores the overarching conversation we've had in national politics over the last few years, focusing on spending cuts instead of job losses.
The fact is that it's not about having a discussion; it's about increasingly using the debt ceiling as a weapon. As Heritage Action CEO Michael Needham told reporters last week: "To simply have something there so that the party out of power can grandstand about debt without doing anything about it is ridiculous and dishonest." Needham favors keeping the debt limit and using it as a weapon to make policy changes. But while it's true that debt ceiling increases have in the past sometimes been the vehicle for negotiations and policy changes, there was never previously a serious suggestion of deliberately failing to pass a debt ceiling increase. As Jason Furman, the chairman of President Obama's Council of Economic Advisers, said last week: "We've never seen this type of concerted effort where one party says that default is completely reasonable and has a multi-year strategy of repeatedly trying to push the country to the brink of default to extract its ransom."
This time, we came within a few hours of the Treasury running out of money and facing the imminent likelihood of not being able to pay its bills. Who's to say that next time Ted Cruz – or, more likely, someone without his presidential ambitions – wouldn't filibuster the last minute deal, sending us careening into the fiscal unknown? The debt ceiling has been suspended until February 7 and maybe next time it will be raised quietly, but I wouldn't count on it.
Here are three ways to remove the debt ceiling danger:
- Bring back the "Gephardt Rule": Back in the late 1970s, Democrats got tired of having to cast politically problematic votes raising the debt ceiling, so Missouri Rep. Dick Gephardt, then in his second term (and later the House's Democratic leader) came up with an elegant – not to mention commonsensical – solution: Raise the debt ceiling as part of the annual budget. The debt limit would be increased by however much debt would be necessary to pay for the budget. This fixed the basic problem with the debt ceiling, which is that it separates the spending from borrowing, setting up the confusing situation of having to raise a limit to finance old spending (which is not what many people believe, especially because demagogic pols mislead them). It didn't eliminate the need for stand-alone debt ceiling votes entirely – sometimes the limit would have to be raised between budgets – but it went a long way toward defusing the bomb. Unfortunately, the new House GOP majority in 1995 got rid of the Gephardt rule because it wanted to try to use the debt ceiling as leverage to extract policy concessions from President Clinton.
- Enact the "McConnell Rule": During the last debt ceiling hostage crisis, Senate GOP Leader Mitch McConnell came up with the idea of having the president be the trigger man on debt ceiling increases rather than the Congress. When the time came, the president would certify that an increase was required and the ceiling would go up unless Congress passed a resolution of disapproval – and even then the president could veto it. This is actually the mechanism in the bill which President Obama signed last night suspending the ceiling until February. It defuses the bomb while giving members the chance to scream, yell and cast votes against the increase – we could still have a conversation about the debt! When the debt ceiling is next raised, the McConnell rule should be made permanent.
- Get rid of the debt ceiling: As I said at the top, it doesn't make any sense to keep a bomb in your house and say that it's for fire safety. Just get rid of the bomb.
As a realistic matter, it's probably too much to hope that any of these measures are likely any time soon. The best we can hope for is probably the norm that Obama is trying to institute: that debt ceiling increases aren't appropriate hostage-taking situations. And maybe that way will work. But we'd be wiser as a country to nip the whole thing in the bud before we dance up to a debt ceiling deadline and then bumble right over it.
- Read Brad Bannon: The Baby Boomers Are to Blame for Polarized Politics and Gridlock
- Read Susan Milligan: Kathleen Sebelius, Jonathan Jarvis and Pointless Attempts to Make Obama's Team Resign
- Check out U.S. News Weekly, now availableon iPad