The Debt Limit and the Limits of Obstructionism

David Super

     The Biden Administration did an impressive job of drawing media attention last week to the country’s formally reaching the statutory debt limit.  This milestone has been reached without incident numerous times in the past.  Neither the Administration nor anybody else serious suggested that this time would be any different, but they sold the symbolism better than any of their predecessors. 

     This performance leaves me cautiously optimistic that the Administration will finesse the overall debt limit debate effectively over the next year, leaving the economy, democratic governance, and the government’s functionality largely untouched.  The debt limit is fundamentally a challenge of political framing rather than substantive lawmaking, making a clear-eyed approach to the politics decisive.  Contrary to some commentary, congressional procedure will pose little obstacle to resolution of this problem.

     The debt limit was enacted long ago, when the congressional budgeting process was far less sophisticated.  It sought to limit the Executive Branch’s routine evasion of Congress’s constitutional power of the purse.  The debt limit is best understood as being in pare materia with the Anti-Deficiency Act and other pre-modern laws seeking to renew congressional control over federal spending. 

     Important financial legislation routinely requires updating.  This is true of securities and banking regulation, this is true of the Internal Revenue Code, and this is true of congressional budget procedures.  Too many arbitrary lines must be drawn, too many assumptions must be made that future transactions will be like historical ones, and so on.  Those with contrary interests will reliably find new ways to structure transactions to evade, or gain beneficial treatment under, any fixed set of rules. 

     Modern congressional budget procedures – the system of laws beginning with the Congressional Budget and Impoundment Control Act of 1974 – have undergone frequent updating.  Partisan divisions have left significant holes – notably the accessibility of reconciliation procedures to pass budget-busting legislation – but their definitions are generally up-to-date and they largely foreclose simplistic evasions of their core rules.

     As Congress’s success in reclaimed effective control of fiscal affairs long ago rendered the debt ceiling unnecessary, Congress has paid little attention to updating its definitions and other structural provisions.  As a result, the Administration has numerous means available to continue to operate the government while literally complying with the debt limit legislation.  One well-known set of devices, the so-called “extraordinary measures”, have become entirely ordinary and are routinely applied by Treasury officials of both parties.  Many others wait in the wings, from premium bonds to platinum coins.  All are gimmicks, but then so is the debt limit itself at this point.    

     An ethical case can be made for refusing to engage in subterfuge to prevent legislation from achieving its intended purpose even if one personally rejects that purpose.  But almost nobody argues that the debt limit’s purpose is to provoke a default on the federal government’s debt.  That means the only debate is over how to avoid a default, with neither side obligated to accept the other side’s policy program as a means of avoiding a result that neither side is willing to publicly embrace. 

     The simplest approach would be for President Biden to declare that the debt limit is unconstitutional, violating Section 4 of the Fourteenth Amendment:  “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”  He could also construe the specific commands of legislation appropriating funds, and the Impoundment Control Act, as superseding the debt limit, construing the debt limit to forbid only borrowing to pay for expenses not authorized by Congress.  That would render the debt limit a mere implementing statute for the Constitution’s Appropriations Clause, but then again so is much of the Anti-Deficiency Act.  Or President Biden could combine these two approaches, narrowly reading the debt limit in deference to the canon that calls for avoiding constitutionally problematic interpretations. 

     President Biden would be foolish to make substantive concessions to raise the debt limit.  House Republicans panicked President Obama into doing so, and the result was sequestration that hobbled numerous government functions – for which Democrats were largely blamed.  And the extortionate demands just kept on coming until President Obama finally called the Republicans’ bluff, as he could have done years earlier.  President Biden watched those machinations at close range and surely does not want to follow that path again, particularly with Rep. Gaetz declaring that he only cooperates when he cannot think of any more concessions to demand. 

     On the other hand, much of the public would condemn the President if he unilaterally disarmed the debt limit without making a concerted effort to get House Republicans to do their part to avoid a default.  Accordingly, Administration officials likely will try to use their ability to bypass or disregard the debt limit as leverage in discussions with House Republicans rather than jumping immediately to implement those measures. 

     In the end, pressure from business leaders is likely to drive one of two scenarios.  One possibility is that they will publicly demand that President Biden defang the debt limit himself, providing the necessary political cover.  A variant on this is that they press Senate Republicans to pass a clean debt limit bill – which would have to be bipartisan – to isolate the House Republicans and allow President Biden to frame his action as a response to the irresponsibility of the House. 

     The other possibility is that business groups press a handful of House Republicans – such as Members from New York and New Jersey clearly dependent on businesspeople rather than culture warriors for support – to back a discharge petition for a clean debt limit increase.  This procedure would be fairly straightforward and would not depend on the extremists that Speaker McCarthy installed on key committees to win his gavel. 

     Someone, either a brave Republican or a low-profile Democrat, would file a clean debt limit bill and then would separately file a House resolution to bring the bill to the floor on a rule requiring a simple up-or-down vote.  Filing a discharge petition on the bill would allow the House Rules Committee to bring it to the floor under a rule allowing it to be amended with a Christmas tree of extremist demands.  Filing a discharge petition on the proposed rule, however, would ensure that it and the underlying clean debt limit bill could pass the House with solid Democratic support plus five Republicans. 

     In theory, the Senate should be even a greater hurdle, with the fifty remaining Democrats having to pick up ten additional votes rather than the five needed in the House.  And unlike 2021, Senate Democrats cannot pass debt limit legislation on reconciliation – requiring only fifty-one votes – because that would require the House first to agree to a budget resolution authorizing reconciliation. 

     In practice, Senate campaigns are sufficiently expensive that few senators want to risk being cut off by big business.  Business leaders’ 2021 threats to Senate Republicans over debt limit obstructionism have ensured that a critical mass will fall into line once the House is dealt with.  Senate Republican leaders have clearly signaled that they will not join their House colleagues’ brinksmanship. 

     One might imagine that, once business-oriented House Republicans signal Speaker McCarthy privately that they are ready to sign a discharge petition, the Speaker would try to salvage some face-saving deal with the Administration.  Extremists’ current leverage in the House, however, might well prevent him from doing so.  That failure could weaken both him and the extremists even further:  once the first piece of legislation moves via a discharge petition, that route will look more and more attractive for subsequent bills, including continuing appropriations to avert a partial government shutdown on October 1.

     More broadly, the extreme MAGA Members dominating the House Republican Caucus are making very much the same mistake that some progressives do:  assuming that the decisive factor limiting progress on their agenda is the timidity of more establishment members of their own party.  In fact, key parts of their own electoral coalition do not support their aggressive approach.  When their predecessors went maximalist with government shutdowns, they repeatedly took the great majority of the public blame and weakened themselves going forward.  These Members’ unwillingness to learn from past battles will benefit the Democrats unless President Biden, too, fails to heed the lessons of history. 

     @DavidASuper1