The national debt limit is Greek to most Americans. The machinations to raise the debt limit to avoid federal government default is the catnip for political geeks.
Federal spending is bumping against the existing debt limit, which requires Congress to act to raise it. That won’t be easy because almost all congressional Republicans have lined up to oppose any increase. Congressional Democrats are left with resurrecting an arcane process from an earlier debt limit standoff in 2011.
The process to raise the debt limit involves a deliciously ironic resolution of disapproval. The process begins with President Biden sending Congress a note indicating he plans to raise the debt limit unilaterally. That triggers a resolution of disapproval in Congress in which simple majorities can override the President’s action.
Since Democrats control both the House and Senate, the disapproval resolution would likely fail. Republicans can tell their constituents they voted against profligate spending by Democrats. Democrats can report to their constituents they prevented a national financial emergency in the face of GOP obstinacy. Everyone would be happy and the federal government could continue without interruption.
The disapproval resolution process worked in 2011 and again in 2012 when President Obama was in the White House and Republicans controlled the House. Republicans extracted spending cuts in return for a higher debt limit. The political bargaining established a $2.4 trillion, 10-year deficit reduction plan and creation of a supercommittee to achieve the spending cuts. The supercommittee failed and automatic cuts, which were referred to as sequestration, took effect.
The seat-of-the-pants process led to the nation’s first downgrade of its credit rating.
Democrats could have simply passed a debt limit increase or, in the alternative, a debt limit suspension. They chose not to pursue the straightforward path to avoid bearing full political responsibility for raising the debt ceiling in the face of almost unanimous Republican opposition. The easiest option that Democrats declined to use would have been to include a debt-limit increase in the budget reconciliation resolution, which is exempt from a Senate filibuster.
Leaders in both political parties have pledged in the past to avoid a stalemate that leads to a partial government shutdown, which occurred in 2013 when Republicans objected to a debt ceiling boost. The spectacle of “closed” signs on federal agency doors was a political turn-off. During the Trump presidency, Democrats provided the needed votes to raise the debt limit when GOP congressional conservatives balked on voting for the increase.
The disapproval resolution process worked in 2011 and again in 2012 when President Obama was in the White House and Republicans controlled the House. Republicans extracted spending cuts in return for a higher debt limit. That same dynamic doesn’t exist today.
The indirect resolution of disapproval approach to raising the national debt ceiling worries some Washington, DC insiders. Democratic majorities in the House and Senate are slim, which creates leverage for Senate and House moderates to exert as House committees are assembling the bills to carry out the $3.5 trillion budget reconciliation resolution. Moderates have urged reduced spending levels, while Democratic progressives are pushing for the full $3.5 trillion.
The other political wildcard is that four GOP senators refused to sign a letter drafted by Senate Minority Leader Mitch McConnell to oppose the debt limit ceiling. They could use their leverage to influence budget reconciliation spending bills, which must be ready by mid-September, to benefit their home states.
Yet another curve ball is congressional reaction to the now-completed US withdrawal from Afghanistan, which has prompted bipartisan criticism and launched new fears of attacks from terrorists that may be able to regroup in Afghanistan.