Debt ceiling compromise should be made for taxpayers, not against them

Democrats and Republicans are feuding over the nation’s debt ceiling again, with each side accusing the other of acting irresponsibly in the face of a dire situation. Politicians should not risk a default on the federal government’s obligations. Instead, they should implement a bipartisan plan to get our country’s finances back in order, while also agreeing upon a debt ceiling increase. Unfortunately, a look back at recent history shows that debt ceiling deals are quite commonplace in Washington — and they usually don’t serve America’s taxpayers well. 

The last time Congress passed a truly clean debt ceiling increase or suspension was more than six years ago, in 2015. Since then, three debt ceiling increases (and one suspension) have accompanied big spending bills that made it easier for both Republicans and Democrats to swallow action on the debt ceiling. 

Democrats have grumbled plenty recently about their three votes to raise the debt ceiling after GOP-passed tax cuts in 2017 raised the national debt, but those debt ceiling votes included plenty of spending initiatives designed to make Democrats happy. A 2018 budget deal under President Trump and a Republican-led Congress received Democratic votes after dealmakers green-lit tens of billions of dollars in new non-defense spending. A 2019 budget deal, under President Trump and a Democratic-led House, included more big increases to non-defense spending that were sure to please elected Democrats. 

Stretch back to 2017 and, as Roll Call’s Peter Cohn has pointed out, GOP leaders wanted to “clear the decks” on the debt ceiling for the forthcoming tax bill. Democrats demanded big policy concessions for undocumented immigrants known as “Dreamers,” seeking to protect them from deportation. Urgent hurricane relief needs and an impending government shutdown got in the way of immigration talks, and the 2017 debt ceiling eventually passed with bipartisan votes, too. And Republicans supported President Obama’s last debt ceiling increase, in 2015, but as part of a budget deal that included big increases in defense spending. 

In short, it is the recent rule — not the exception — that debt ceiling increases or suspensions in Congress are accompanied by policy and spending concessions designed to win the support of both parties. Unfortunately, the loser in these deals often ends up being the American taxpayer, who’s left with the bill for new spending that Congress refuses to fully pay for. 

While lawmakers should not engage in brinksmanship over the debt ceiling, time is running out for Republicans — most of whom have so far refused to articulate any scenario in which they would vote to raise the debt ceiling — to offer Democrats any pro-taxpayer concessions that would get them to ‘yes’ on more immediate action to lift or suspend the debt ceiling. It seems the likeliest scenario now is a huge stock market panic that hurts businesses and workers, before enough lawmakers in both parties relent on a simple debt ceiling increase or suspension. 

There is a better path forward. 

Congress could repeat the Budget Control Act (BCA) process from 2011, while correcting for some of the major mistakes lawmakers and presidents from both parties made during the 10-year BCA era that’s coming to a close this week. Such a compromise, which would require a fiscal grand bargain of sorts between Democrats and Republicans, could include discretionary spending caps, limitations on off-budget spending accounts, a tighter definition of “emergency spending,” and a bipartisan committee devoted to identifying deficit reduction options (which, if successful, could reduce or eliminate the need for the aforementioned spending caps). 

This option would probably be the best possible outcome for taxpayers in the immediate term, but it clashes with the political reality of an acrimonious Washington where the majority party is currently debating whether to spend $2 trillion or $3.5 trillion or $5 trillion. 

Small but meaningful budget process reforms could be a substitute for a grand bargain, and some good ideas that budget experts have shared in recent years include biennial budgeting and debt-to-GDP targets in the federal budget, bipartisan rescue committees for Social Security and Medicare, and strengthening pay-as-you-go rules for new legislation in Congress. 

There are more smart ideas out there, proposed and proffered by both Republicans and Democrats. Republicans holding out on the debt ceiling would be wise to gauge Democratic interest in some or all of these reforms soon, before a market or consumer panic requires emergency action on the debt ceiling. 

Andrew Lautz is the Federal Policy Director with the National Taxpayers Union.