With Treasury Secretary Janet Yellen’s announcement last week that the U.S. would hit its borrowing limit Thursday and begin using extraordinary measures to avoid defaulting, we officially entered debt ceiling standoff season.
The good news is that the U.S. has never been forced into default. The bad news? The one time it came close to happening has a lot in common with this year: a Democratic president, a Democratic majority in the Senate and a new Republican majority in the House. The worse news? Many House Republicans consider that 2011 episode a tremendous triumph and are seeking to repeat it.
The 2011 debacle cost the nation billions of dollars as a result of higher interest rates. What’s more, it didn’t accomplish any of the goals Republicans set out to achieve.
But that isn’t deterring congressional Republicans from engaging in debt-ceiling brinkmanship. A group of extremists within the party have even revived an especially feeble gambit from 2011 — the idea that Congress could tell Treasury which debts to pay first, supposedly as a way to stave off significant damage to the economy. If the overall debt limit maneuver is like threatening to drive the economy off a cliff, then debt prioritization is akin to claiming that there is no real danger because they will first install a driver’s-side airbag that engineers say is faulty.
Republicans’ ploy is similar to 2011 in another way: Lawmakers are trying to use the debt limit to force policy changes before they have figured out what they are asking for. Hostage-taking is the point; the demands can always be formulated later.
The radical faction within the GOP, a group that includes the House Freedom Caucus and other members adding up to around a quarter of the Republican conference, probably can’t be reasoned with. So what can be done?
While it can be tough to spot voices of reason within the GOP caucus, there are perhaps 50 lawmakers who reject radicalism. Given Republicans’ slim 10-seat majority in the House, these mainstream conservatives are the key swing votes. They should make it very clear that they favor a no-strings-attached debt-limit increase and that their support, combined with that of 212 House Democrats and a filibuster-proof majority in the Senate, can get the measure passed. (Mainstream Republicans would still need to find a way to bring the measure to the House floor for a vote over the objections of the radical faction. One way would be to threaten to use an obscure House procedure called a discharge petition that can force House votes on measures even if the majority party refuses to advance them. Unfortunately, most experts say that a discharge petition would be ill-suited for the current situation; House scholar Josh Huder says it would be “kind of like trying to do open heart surgery with an ax.”)
This won’t be easy for the GOP. Up until now, few mainstream Republicans have demonstrated a willingness to take on the radical faction publicly, in part because they share many of the same policy goals. For example, most Republicans in the House want to see spending cuts on Medicare and other permanent government programs.
But mainstream lawmakers need to save those battles for later, when annual spending bills are hashed out.
Instead, they should indicate that while they will fight hard for legislation that they support, they are interested in real change, not empty symbolism. To demonstrate that they mean business, they should vote down one of the radicals’ key demands, one that Speaker Kevin McCarthy already agreed to: a House vote this year on a budget that balances within 10 years. Although many mainstream conservatives would support such a budget as an aspirational plan, they know it would involve such severe cuts to popular government programs that it won’t be a realistic course of action. (It’s one thing to vote for a budget resolution that implies a future commitment to steep cuts to popular programs without spelling them out; it’s another thing to actually vote for specific cuts. The former might pass even if a lot of House Republicans had no intention of actually doing the latter — let alone the chances of the Senate and the president going along.)
Meanwhile, the White House needs to start seriously thinking about the various ways of getting around the debt limit. Several methods have been proposed as both legal and effective.
President Joe Biden is going to have to determine the best way to act unilaterally to protect the economy while staying within the bounds of the law and the Constitution. Fortunately, those goals are aligned; whatever presidential action appears to be most consistent with the rule of law should also be the most calming to the markets.
Unlike government shutdowns caused by Congress failing to pass spending bills, where the damage is minimal at first and then gradually grows over time, the fallout from a debt limit crisis (as we saw in 2011) begins as the deadline approaches and would escalate sharply as soon as the government failed to pay its bills.
I’m not especially optimistic that mainstream House conservatives will actually stand up to their radical peers. The history is … not good. So the White House needs to start planning right now for the best way to respond. Because they don’t want to wait until the car is halfway down the cliff.
Jonathan Bernstein is a Bloomberg Opinion columnist covering politics and policy. A former professor of political science at the University of Texas at San Antonio and DePauw University, he wrote A Plain Blog About Politics. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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