Nearly 90 percent of economic policy experts polled by National Journal said a successful vote to raise the debt ceiling would be attached to spending cuts, automatic triggers to slash spending, or entitlement cuts, despite the White House's desire that Congress raise the borrowing limit without conditions.
And in a sign of how divided Democrats and Republicans continue to be on the question, almost three-quarters of National Journal’s Economic Insiders thought a vote to raise the debt ceiling would take place within a week of August 2, the date the government expects to run out of options to avoid default, according to Treasury Department estimates. Only one thought Congress would vote to raise the limit this month or next.
The debate gained urgency after the government hit the debt ceiling last Monday. The Treasury Department is now taking “extraordinary measures,” such as delaying pension payments, to prevent the government from defaulting.
Treasury Secretary Timothy Geithner warned this month that those measures would be exhausted on August 2, and that failure to raise the ceiling after that point “could cause irrevocable damage to the economy.”
Most Republican members of Congress have signaled willingness to raise the ceiling if the vote is paired with spending cuts and long-term budget reforms. House Speaker John Boehner, R-Ohio, said in a speech on May 9 to the New York Economic Club that it would be “monumentally arrogant and massively irresponsible” to raise the debt limit without addressing the things that drive the debt.
The vast majority of Insiders polled by National Journal predicted Republicans would prevent a successful stand-alone vote to raise the debt ceiling, though opinions varied about what the specific provisions would be. A few cited the political need for Republicans to take a tough stand on the deficit before agreeing to increase the debt ceiling.
“The key motivating factor is that many will want to be able to say that they held out to get these things before voting to raise the limit,” said one Insider.
Roughly half said automatic triggers to cut spending would be part of a deal. Half of the Insiders also thought the final vote would include immediate spending cuts. The tallies reflect the fact that several Insiders predicted more than one budget-cutting provision would end up in the measure.
Despite the unmatched importance of entitlement spending to long-term debt troubles, just six of 38 economic policy experts thought entitlement cuts would be paired with a vote to raise the debt ceiling. This could reflect the controversial nature of entitlement reform compared to less politically risky measures such as spending triggers.
Whatever the final package, Insiders were nearly unanimous in their view that the vote would come down to the wire. Just one thought the ceiling would be raised before July, and about three-quarters thought it would occur within a week of the current August 2 deadline. Three declined to predict a date.
Two Insiders gave particularly cynical explanations for their predictions. “[T]he ceiling will be raised on a Thursday so that the senators will be able to leave town appropriately early for their August recess!” one said. “Then both parties in both houses will try to figure out why normal people think so little of them.”
National Journal asked more than 50 economic policy experts from across the political spectrum to predict what would be paired with a vote to raise the debt ceiling. The options were nothing, automatic triggers to cut spending, immediate spending cuts, and entitlement cuts. They were also asked which day they thought the debt ceiling would be raised, if ever.
All responses are kept anonymous, to encourage candor. National Journal received 38 responses. Republicans include former economic advisers to President George W. Bush like Susan Schwab and Douglas Holtz-Eakin. Democratic or liberal insiders include Jared Bernstein, former chief economist and economic adviser to Vice President Joe Biden; Dean Baker, co-director of the Center for Economic Policy Research; and Charlene Barshefsky, former U.S. trade representative under President Clinton.
What will be paired with a vote to raise the debt ceiling?
- Nothing 11%
- Automatic triggers to cut spending 50%
- Immediate spending cuts 47%
- Entitlement cuts 16%
Responses to Question 1
"There will be many House votes and they will be paired with every kooky scheme to cut the deficit known to man except any involving raising taxes. The Senate will do what it usually does and have votes paired with empty political gestures for both parties and, as the clock ticks down and every silly political vote has been cast, the ceiling will be raised..."
"Because imposing future triggers is easier than making cuts today."
"Triggers, though vague, and perhaps not restricted to just spending cuts; I assume there will be a push to have tax expenditures be part of that as well."
"Some procedural 'reforms' that will turn out to be largely empty promises. These reforms will include spending caps and limits and be “enforced” by triggers."
On what day will the debt ceiling be raised?
- June 2.9%
- July 40%
- August 57%
- Within a week of current deadline 74%
Responses to Question 2
"But this could be just the first time this will need to be done between now and the November 2012 election. It is possible this increase either or both will be temporary and only enough to buy a couple of months time so that negotiations between Obama and Republicans can continue."
"The summer recess begins August 8 so my guess is August 7th after the package has been voted down once in the House on about August 4."
National Journal Economic Insiders: Joseph Aldy, Dean Baker, Michael Barr, Charlene Barshefsky, Bruce Bartlett, Steve Bell, Jared Bernstein, Karan Bhatia, Alan Blinder, Heather Boushey, Stan Collender, Jake Colvin, Pete Davis, Mark Doms, Lisa Donner, Karen Dynan, Michael Ettlinger, J.D. Foster, Tony Fratto, Dean Garfield, Ed Gresser, Keith Hennessey, Brian Higginbotham, William Hoagland, Douglas Holtz-Eakin, R. Glenn Hubbard, Dennis Jacobe, Dennis Kelleher, Jim Kessler, Ken Kies, Donald Kohn, Randall Kroszner, Thea Lee, Maya MacGuineas, John Makin, Michael Mandel, Joe Minarik, Heather McGhee, Lawrence Mishel, Mark Muro, Aric Newhouse, Adam Posen, Eswar Shankar Prasad, Martin Regalia, Carmen Reinhart, Vincent Reinhart, Robert Reischauer, Alice Rivlin, Richard Sawaya, Susan Schwab, Sherle Schwenninger, Rob Shapiro, Heidi Shierholz, Ken Simonson, Joe Ventrone, Alan Viard.