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Raise the roof! Democrats should go big in raising the debt ceiling

A new deal among congressional leaders of both parties soon will allow majorities in each chamber to raise the debt limit, with no ability for minority senators to filibuster. That means that Democrats, who control majorities in the House and Senate, will have a clear path to raise the debt ceiling without a single Republican vote. They should make the most of their chance by going big — 14 figures big — to break us out of our cycle of self-imposed debt ceiling crises. 

The deal makes Democrats happy because it means the debt ceiling will not become a major crisis for the Biden administration in 2021. It makes Republicans happy because they can blame Democrats for spending big and thereby driving up the nation’s debt past $30 trillion, a number they’re eager to link to the nation’s recent inflation and use in political ads ahead of next year’s midterm elections.

What the deal does not do is significantly alter the United States’s fiscal prospects. To those of us who have closely watched this year’s debt limit negotiations, this is utterly unsurprising, because neither side even bothered to pretend that they were interested in reducing spending. Rather, the debt ceiling simply offered Republicans a chance to give the majority Democrats a hard time and to keep the fiscal costs of their ambitious spending plans in the news. Much of their maneuvering was designed to force Democrats to choose how high to raise the ceiling, instead of suspending it for a certain period of time, as often has been the practice during the past decade. Democratic leaders decided it wasn’t worth fighting any longer, which is what brought us to the deal we have today.

But Democrats ought to consider taking the opportunity to do something brave and neutralize the debt ceiling for many years to come. A standard move at this point would be raising the debt ceiling by just a few trillion dollars, ensuring that the issue would come up again in the next Congress, when it once again would be a headache for the majority party.

The bolder play would be to raise the debt ceiling by something more like $10 trillion, or even $20 trillion. To be sure, such numbers are mind-bogglingly large — and they might make voters do a double take. But that’s the point. Democrats could go on an all-out communications blitz to educate the American public about the futility of debt ceiling standoffs in recent years, and explain that their current raise would spare the country of similarly pointless fracases. They could fairly assert that they were ensuring that America would pay its bills, on time and in full, for years to come.

Even better than this plan would be to change our fiscal architecture entirely, so that the Treasury Department is authorized to issue as much debt as needed to be able to meet the country’s legal obligations, including interest payments. This wouldn’t give the executive branch a “blank check,” as many people intuitively fear. Instead, it would make it clear that when Congress makes spending decisions, it is also necessarily making decisions about debt accumulation. That is already the case, but our strange debt ceiling fights make it much harder for regular citizens to understand the connection.

Unfortunately, such a foundational overhaul is not in the cards right now. The terms of the deal that Congress is pushing through would not allow it. Only a simple raise of the statutory limit will be permitted, not any kind of transformation of the basic mechanism. An enormous raise would do much of the same work. 

Democrats should consider pushing through an alternative mechanism for getting the country’s representatives to focus on our rapidly accumulating debt, the interest payments on which threaten to crowd out other important national priorities in the years to come. Our failing budget process is certainly not answering that need right now. For example, a resolution that cleared the House under suspension of the rules — meaning that it was relatively uncontroversial — would institute a joint hearing of the House and Senate Budget Committees on the fiscal state of the nation. Senate Democrats could push to get that over the finish line, or pursue some other way of showing Americans that their party is attuned to the dangers that debt can pose.

It almost doesn’t matter what they choose. Just about anything would be better than having more self-imposed debt ceiling crises.

Philip Wallach is a senior fellow at the American Enterprise Institute.

Tags debt ceiling Fiscal cliff Inflation Senate Democrats US economy

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