How to defuse the debt ceiling for generations to come
In the wake of the tumultuous struggle over the $1.2 trillion infrastructure measure, Congress is turning to the battle over President Joseph R. Biden, Jr.'s $1.85 trillion "Build Back Better" initiative. Soon thereafter, however, Congress will once again have to address the debt ceiling. Republican leaders say they are intent on forcing the Democrats to raise the ceiling on their own; presumably they have in mind a boost that would last for only a year or two. But the Democrats could do better and defuse the issue for the long term. If they did so, they would deliver everyone—themselves and the nation—a huge favor.
The periodic struggle over raising the debt ceiling pretends to be a method for Congress to impose fiscal discipline upon itself. In reality, it provides one party in Congress the opportunity to extort the other in return for not causing the nation to default on its debt. The best solution would be to wipe this anachronism off the books. But doing so would require 60 votes in the Senate. The Democrats have only 50 (assuming intraparty unanimity could be achieved on this issue), and the Republicans are in no mood to provide the other 10. Fortunately, a Plan B exists that would allow the Democrats to achieve an outcome almost as good as complete repeal, and they wouldn't have to rely on cooperation from the Republicans.
Plan A probably is a nonstarter in a closely divided Congress
If Congress someday fails to raise the debt ceiling in a timely manner, the US Treasury will be forced to default, and the federal government will no longer be able to borrow at the cheapest rates in the market, a senselessly destructive result.
Why not go for Plan A—that is, use the "reconciliation" process rooted in the 1974 Budget and Impoundment Control Act to repeal the debt limit altogether? That appears not possible because Section 310 of that law requires that, in order to be protected from the usual 60-vote requirement, a budget resolution must "specify the amounts by which the statutory limit on the public debt is to be changed." The Senate Parliamentarian probably would rule that a measure to repeal does not meet the Section 310 requirement to specify a number for the size of the increase. In addition, Section 313 (often referred to as the Byrd Rule, named after former Senate Majority Leader Robert Byrd of West Virginia) requires that every provision of a budget resolution must affect either outlays or revenues. Repeal of the debt ceiling would not affect either.
One wildcard: In principle, the Parliamentarian advises the presiding officer in the Senate but does not have the power to issue binding rulings. The presiding officer could reject the advice of the Parliamentarian and deem a provision repealing the debt ceiling to be in compliance with Section 310. While there is precedent for a presiding officer to overrule, it is only rarely used. Reportedly, the last time was when Vice President Nelson Rockefeller did it in 1975. Expect serious fire and brimstone if Vice President Harris does it nearly half a century later.
There is a Plan B
One approach to clearing these procedural hurdles would be to name a number so big as to take the debt ceiling out of consideration for generations. For example, a budget resolution could specify that the limit will be raised to $1787 quintillion (that is, the year in which the Constitution was ratified multiplied by 1 million times 1 trillion). A debt ceiling set at that level would be both patriotic and safely remote.
As described here, a budget resolution to raise the debt limit could theoretically be bottled up in the Senate Budget Committee if all Republican members boycotted the session, denying Democrats a quorum. But Senator Lindsey Graham (R-SC) has said he would be "inclined" to show up; if he did, that would clear the procedural logjam. Even if he didn't, however, the measure could be brought to the Senate floor at the cost of four additional hours of debate. At that point, the question would be whether every Democratic senator would agree to take this sensible step to defuse a weapon of financial destruction.
Senators Tim Kaine (D-VA) and Jeff Merkley (D-OR) have proposed still a different approach. Picking up on a suggestion originally advanced by Senator Mitch McConnell (R-KY) in 2012, they would change the process so that the President would propose an increase in the debt ceiling. The Congress would have 15 days to vote it down. If Congress did not, the new ceiling would take effect.
If the McConnell/Kaine/Merkley plan could be enacted, it would provide robust protection against default. To see why, imagine that the Democrats lose control of the House and the Senate in 2022. Senator McConnell, once again serving as majority leader, could block a Biden proposal to raise the debt ceiling. If the GOP-controlled House did the same, the measure would go back to Biden's desk. But he could then veto it, sending it back to the Congress, where the veto could be overturned only with a two-thirds vote in both houses. That seems like protection enough, even for someone very worried about the primacy of Treasury securities in global credit markets.
The problem with McConnell/Kaine/Merkley is not so much that it leaves a vestige of the old scourge on the books, but rather that passing it into law seems a remote prospect, given that it would require—guess what—60 votes in the Senate.
The old way is not good enough
The debt limit is a financial accident of massive proportions waiting to happen. Wiping this destructive measure off the books probably would require 60 votes in the Senate to overcome a filibuster, as would shifting the burden of action from the Congress to the President. Perhaps someday, one side or the other will win a 60-vote majority in the Senate and will be possessed of the good sense to take care of the problem once and for all. For now, the practical path forward is to raise the ceiling so high that no one need worry about it for many generations to come. If that step is not taken, a terrible accident probably will happen someday, and everyone will rue the fact that today's political leaders did not have the courage to deal with the issue once and for all.