Opponents of the statutory limit on the government's borrowing—and there are plenty—may get a glimpse of life without the debt ceiling, but only for a few months.
The GOP’s proposal before the House on Wednesday, which enjoys qualified White House support, would suspend the federal government’s borrowing limit for roughly four months, taking a powerful but controversial bargaining chip off the table. When reinstated on May 19, the debt ceiling would be raised to include whatever additional debt the government has taken on in the intervening period. Rather than commit to specific increases in the debt ceiling, the new plan obviates the issue altogether.
“We don’t see too much difference between the dollar amount and the date, because the dollar amount instantly is equated to a date,” a House GOP aide said. Each $100 billion in debt lasts about a month, although the exact number can fluctuate wildly depending on costs and revenue in that month.
But the new plan has an added advantage for Republicans: It renders moot the GOP’s recent demand that a debt-ceiling increase be matched with an equal amount of spending cuts over the next decade. The bill would also withhold pay, albeit temporarily, from lawmakers in the Senate should the chamber fail to pass a budge before April 15.
GOP lawmakers were lining up behind House Speaker John Boehner on Tuesday night, said Rep. Steve Womack, R-Ark. One of Boehner’s biggest critics, Rep. Tim Huelskamp, R-Kan., vowed to vote against the measure, although, he told National Journal Daily, “Political reality looks like it will pass.” Senior Democratic Senate aides said the chamber would likely leave the bill’s core elements in place. The White House has said it would not oppose the legislation.
Many economists argue that the country would be better off without a statutory cap on borrowing. In a survey published last week, 38 economists were asked whether they agreed or disagreed with the statement "A separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes." Just under 85 percent said they agreed or strongly agreed.
At a Tuesday hearing on the history of the debt limit, experts and lawmakers on both sides called for increasing the ceiling, though some emphasized that the increase should be temporary because the debt ceiling serves as an important and necessary tool for lawmakers.
"America will pay its debts; that's been made clear by Republicans and Democrats in Congress," said Rep. Kevin Brady, R-Texas. "As we've seen in the past, it's also been a helpful tool not only on checks and balances but to enact spending reforms and restraints."
"The Framers fully anticipated and intended that congressional power over federal taxation, borrowing, and spending would be used as a political weapon," said expert witness Lee Casey, a lawyer at Baker Hostetler.
If Republicans vote to push the debt-limit back a few months, they would maintain leverage to use two less-controversial fiscal deadlines—the March 1 onset of unpalatable across-the-board spending cuts and the March 27 expiration of government funding to wrest concessions from Democrats.
The current approach—temporarily suspending the nation’s debt limit—is a departure from the way Republicans resolved the last such fight, though. In summer 2011, the GOP ended its stand-off over raising the nation’s debt ceiling by instituting a three-step process that led to increases of $400 billion, $500 billion, and $1.2 trillion.