A New Normal For Debt Ceiling Increases?

Has a precedent been set for future requests by the President to increase the debt ceiling?

Just before the Senate voted to approve the debt ceiling deal, Minority Leader Mitch McConnell spoke on the floor of the Senate and said this:

One of the most important things about this legislation is the fact that never again will any President, from either party, be allowed to raise the debt ceiling without being held accountable for it by the American people and without having to engage in the kind of debate we’ve just come through.

(…)

“This is no small feat when you consider that just last week the president was still demanding tax hikes as a part of any debt ceiling increase, and that as recently as May, the president’s top economic advisor said it was `insane’ for anybody to even consider tying the debt ceiling to spending cuts. It’s worth noting that two and a half months later, that advisor is longer working at the White House and the president is now agreeing, as a condition of raising the debt ceiling, to trillions of dollars in spending cuts.

While it’s difficult to predict the political future from one incident, Michael Shear of The New York Times thinks that, for better or worse, McConnell may just be right:

In the long term, it may be impossible for Washington to put the debt ceiling genie back in the bottle.

Why? Because in the end, hostage-taking works.

Future Republicans will no doubt look back on the debt ceiling fight of 2011 as a success. Whether conservative members got everything they wanted or not, it is hard to argue that they did not get more than they would have without the threat of holding up the debt ceiling increase.

“We’ve had to settle for less than we wanted, but what we’ve achieved is in no way insignificant,” Mr. McConnell said after the vote.

But it’s not only Republican members of Congress who might take advantage of the debt ceiling.

Given the proven power of the issue, it is not hard to imagine a future in which a Democratic minority finds it in their interests to advance a top priority by threatening to hold up a debt ceiling increase for a Republican president.

That would seem rather hypocritical for current Democrats, who all accused their Republican counterparts of playing fast and loose with the American economy. But politicians rarely worry too much about hypocrisy. And given enough time, political realities shift.

This is largely true. Now that we’ve seen that taking the nation to the brink of default over raising the debt ceiling can work to a parties’ political advantage, especially when dealing with a weak President who is a bad negotiator, there’s no reason to believe that they won’t try it again. Heck, let’s say that the President is re-elected but the GOP ends up with full control of  Congress. At some point in 2013 or 2014 we’ll have to talk about raising the debt ceiling again. Does anyone think we wouldn’t go through this all over again? Assuming Obama even bothered to fight that time, that is.

Jared Bernstein, who served as an economic adviser to Vice-President Biden and now serves as the head of a liberal fiscal policy think tank, debated this “new normal” with former New Hampshire Senator Judd Gregg on CNBC yesterday, and their exchange is worth watching:

Bernstein also addressed the issue on his blog later in the day:

To understand how nonsensical Sens McConnell’s and Gregg’s position is, you have to appreciate that Congress knows when they pass their budget whether it will breach the debt ceiling or not, just like you know when you order your lunch whether you’ll be able to pay for it.  They’re saying, I’m going to keep ordering lunches I can’t pay for and when the cashier hands me the check, I’ll hand it right back and tell her it’s her problem.

The budget process is when you square the ledger.  Or not—there will be budgets, especially in recession, that add to the deficit and breach the ceiling.  In such cases, Congress must borrow to make up the difference, and sometimes that will mean raising the ceiling, as we’ve done without incident since 1917.

But Sens McConnell and Gregg would rather pass budgets they knowingly refuse to pay for, and then threaten default.  You can call that budget discipline if you want.  But I’m telling you, this is not the way of great nations.

In the abstract, I think Bernstein has a good point here. As I wrote during the height of the budget negotiations, see here and here, the entire idea of a debt ceiling law is absurd to begin with. It would be better off if we eliminated it entirely or, barring that, adopting the practice that Denmark has, which is to set the debt ceiling so high that it would never become the kind of issue that the legislature would have to deal with every year or two in the manner that we’re used to.

The one thing that Bernstein’s analysis misses, though, is the fact that we never seem to deal with serious problems in politics until we’re on the brink of some kind of crisis, real or imagined. We knew for the better part of eight months that the debt ceiling would have to be raised, for example, and yet the Democrats chose not to even attempt to do anything about it while they had complete control of Congress. Does anyone really think that the Republicans would have fought a debt ceiling increase in December 2008 if it was tied to an extension of the Bush tax cuts? Personally, I think it would’ve been highly unlikely. And yet, Harry Reid chose not to even attempt it because, he said, he wanted the GOP to share the political pain of raising the debt ceiling.  If Reid had acted responsibly back then instead of playing partisan games, we might have been able to avoid the entieity of the pas six weeks.

Similarly, there’s been talk about restraining spending and cutting the long-term deficit for years, and yet nothing serious has been done by either party to address the situation. It wasn’t until we got to the brink of a possible default that action was taken on an imperfect package of modest cuts. Had it not been for the debate over the debt ceiling, we wouldn’t even be talking about a Joint Select Committee whose job it will be to comb through the Federal Budget looking for nearly $2,000,000,000,000 in additional budget cuts.

Just to be clear, I am not endorsing this governing-by-crisis scenario. It leads to unnecessary economic uncertainty, and usually leads people to make decisions under the pressure of impending events. Nonetheless, it seems to be the only way we can get things done in this country anymore. As with nearly every other previous budget, the appropriations bills for Fiscal Year 2012 remains mostly unpassed by Congress (the House has passed 6 of the 12 appropriations bills, the Senate has only passed one). The Senate hasn’t passed a budget plan in more than 820 days. It’s most likely that, like last year, we’ll find ourselves passing a series of Continuing Resolutions starting on September 30th as Congress finds itself unable to come to agreement on even simple budgetary matters.

Partisans will blame the opposing party for this situation, but it’s clear that this is a bipartisan failure. Republicans are unwilling to consider closing even the most obviously unnecessary tax loophole. Democrats are unwilling to talk entitlement reform despite the fact that its clearly necessary, and aren’t even willing to consider cutting the budget of entities such as NPR or the Corporation for Public Broadcasting, neither of which have any relationship at all to an essential function of government. As long as this continues, the only way to reach agreement on matters like this is when the parties absolutely have to, as in the recent debt ceiling negotiations.

One can decry the brinksmanship that we saw during the debt ceiling debate, and I do, but at least something was done. Which is more than I can say for an average day on Capitol Hill.

FILED UNDER: Barack Obama, Congress, Deficit and Debt, Politicians, Taxes, Tea Party, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. MBunge says:

    “Democrats are unwilling to talk entitlement reform despite the fact that its clearly necessary, and aren’t even willing to consider cutting the budget of entities such as NPR or the Corporation for Public Broadcasting, neither of which have any relationship at all to an essential function of government.”

    Look. I understand you don’t want to become the conservative version of a Fox News Democrat, but you’ve got to stop this sort of nonsense.

    Barack Obama was perfectly willing to go for entitlement reform if the GOP would follow along with tax increases and there is no entitlement equivalent on the liberal side to Grover Norquist.

    And whether NPR or CPB have anything to so with the essential function of government is almost completely irrelevent when measured against how little the government actually spends on those programs. It’s like complaining about somebody who spends 20 bucks a week on comics when his real problem is the $2,000 a week he spends on cocaine.

    Mike

  2. Or even better, take a look at PPACA, it did go after some of the entitlement money (Medicare Advantage subsidies) that according to the CBO extended Medicare’s trust fund depletion date by several years. I don’t want to defend Obama on the debt ceiling extension as it is shit policy, but the facts indicate that Democrats are willing to cut costs in entitlements as long as those cuts have a rational basis other than pain infliction.

  3. michael reynolds says:

    I have to agree with the two above. This is a post that could have been terrific but was undercut by your pathological refusal to see Democrats as they are in the real world of the 21st century, rather than as your outdated ideological posture requires them to be.

  4. Brian Knapp says:

    One of the most important things about this legislation is the fact that never again will any President, from either party, be allowed to raise the debt ceiling without being held accountable for it by the American people and without having to engage in the kind of debate we’ve just come through.

    How is it the President’s fault that Congress promised services for money the government doesn’t have but yet also instituted the debt ceiling to prevent borrowing?

  5. Moosebreath says:

    This will become the new normal when a Democrat is in the White House. When a Republican is in the White House, then any failure to raise the debt ceiling will be termed as hating America.

  6. Idiot says:

    Then Senator Obama got his March 20, 2006 wish:

    “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

  7. c.red says:

    I would hope the new normal would be to tie the debt ceiling to the budget, and then only have stand alone votes in an unforseen emergency (i.e. Katrina). Or get rid of it entirely.

    What I see happening is this is the new normal for Republican Congresses and will become the new normal for Democratic Congresses when they become as radicalized as the Republicans.

  8. Terrye says:

    I agree Doug.

  9. @c.red: I have a hard time seeing the Democratic Party getting as radicalized as the Republican Party mainly because the Democratic Party has a much more diverse and weaker ideological base. Liberals are not the dominant faction in the Democratic Party to anywhere near the extent that conservatives or reactionaries are in the Republican Party. Liberals are radicalizing, but I don’t think liberals have sufficient electoral weight to radicalize the party to a degree where there is absolute fear of any Democrat to piss off the liberal base.

  10. An Interested Party says:

    …especially when dealing with a weak President who is a bad negotiator…

    And what would you have had the President do differently? If he called the bluff of the Republicans, would you have been up in arms if he had used the 14th Amendment to stave of a global economic disaster? Would you have agreed with the many Republicans who might have called for his impeachment for doing that? It’s also nice to see that you continue to suffer from the same affliction that the MSM has…nothing can ever be the fault of one party or the other, everything has to be the “both sides are equally at fault” nonsense…