A Prospect newsletter about the debt limit
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Introducing X-Date: A Debt Ceiling Newsletter

Democrats could have tried to abolish this pointless and dangerous
economic time bomb, but failed to do it.

 

 

J. Scott Applewhite/AP Photo

By Ryan Cooper

**** Welcome to X-Date, a pop-up newsletter about the perilous
debt ceiling talks in Washington. Every day until there's some
resolution or another, the

**Prospect** will bring you news and analysis and the latest status. The
name comes from the term of art used to describe the date at which the
government will run out of borrowing capacity. Treasury Secretary Janet
Yellen recently announced
<[link removed]> that this would
occur on about June 1; that's the so-called "X-date."

Here at the

**Prospect**, we're watching this with more than a little trepidation.

Remember that the debt ceiling doesn't have anything to do with the
budget per se. It's simply a legal anachronism dating to the First
World War, where Congress has set a cap on the national debt. So when
taxing and spending policy is passed that would require more borrowing
than the cap-which happened last December-it has to pass another law
lifting the cap. (If that sounds crazy, it is, and no other country
operates like this.)

Democrats and President Biden have so far been clear that they will not
accept anything other than a clean increase. Threatening to default on
the national debt-which has never happened and would cause a global
financial crisis-to extract policy concessions is not a good-faith
negotiation; it is legislative terrorism. And of course, the debt
ceiling was raised without concessions multiple times during the Trump
and Bush administrations.

Yet it seems highly unlikely that House Republicans are going to pass
such a bill. House Speaker Kevin McCarthy just barely managed to get a
small debt ceiling increase out of his caucus by, as usual, granting the
extreme right of his caucus everything it wanted
<[link removed]>-including
<[link removed]>
reducing the overall budget to 2022 levels, repealing extra IRS funding,
adding work requirements to Medicaid and food stamps, and repealing the
Inflation Reduction Act's green-energy tax credits. Even with that, he


**still** lost four votes.

Now, the president has extended an invitation
<[link removed]>
to McCarthy and Senate Republican Leader Mitch McConnell, along with
Democratic leaders in Congress, to a meeting next week. While formally,
Biden remains steadfast, this is clearly the opening salvo in what can
only be described as a negotiation.

To set the stage for the next month of bitter acrimony, let's recall
the recent history of how we got here. Republicans are of course to
blame for taking the debt ceiling hostage, but Democrats had multiple
chances to at least attempt to take that possibility off the table and
didn't do it.

**Read all of our debt ceiling coverage here**
<[link removed]>

Click to Support The American Prospect <[link removed]>

First, as a structural matter, Democrats controlled the House and the
Senate during the last Congress, and could have passed a law at any time
removing the debt ceiling on a party-line vote, or raising it to an
astronomical number. Of course, that would have required getting rid of
the nonsensical Senate filibuster, but that also could have been done on
a party-line vote. Yet a critical mass
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of terminally Senate-brained Democrats refused to do it.

Even with the filibuster, Democrats still had opportunities to deal with
the problem. The last time the ceiling was raised was at the end of
2021, when they pushed it up to its current figure of $31.4 trillion as
part of a reconciliation package. Some simple arithmetic showed that
this mark would be reached in 2023-after the midterms in which
Republicans were expected to do well. It was entirely predictable that
if Republicans took control of either the House or the Senate, they
would take the debt ceiling hostage. Not only did they do exactly that
during Obama's presidency, twice, today's Republican caucus is
dramatically crazier than it was back in those days.

People said at the time that this was grossly irresponsible. Look no
further than my colleague David Dayen, who wrote
<[link removed]>:
"They could raise it by a bajillion kajillion dollars. They could raise
it enough to ensure borrowing headspace for the next hundred years.
Instead, the plan is to hand over a loaded gun to Republicans in 2023."

Crucially, Democrats had an opportunity to use a 2023 budget
reconciliation bill
<[link removed]>
to raise the debt ceiling. This would only require a simple majority in
the Senate. Reconciliation was used to raise the debt ceiling four times
in the 1980s and '90s. The lame-duck session of 2022 was the perfect
opportunity to pull off this maneuver.

By this time, Republicans were openly stating
<[link removed]>
their plans to take the ceiling hostage so as to enact massive cuts to
Medicare and Social Security. But Senate Majority Leader Chuck Schumer
didn't even try to counteract this, as Dayen again reported
<[link removed]>.
They "decided to do nothing to neutralize the greatest threat to the
economy next year: the debt ceiling, and the crisis House Republicans
are sure to create over it," he wrote.

Would it have been difficult to get Sens. Joe Manchin (D-WV) or Kyrsten
Sinema (formerly, D-AZ) on board for such a bill? Indubitably. Would it
have required concessions? Possibly. Would those have been worse than
what McCarthy and McConnell have cooked up? Absolutely not. Yet Schumer
made no effort to even inquire about this possibility.

[link removed]

Democrats now have two options: either a discharge petition
<[link removed]> in the House, or executive
action. On the former, if 218 House members sign a petition, a bill can
be brought to the floor without needing leadership approval. House
Democrats actually did sneakily file a bill back in January
<[link removed]>
filled with tons of minor items so it could be distributed to every
committee, which could then serve as a shell for a debt ceiling
increase. This gets them past a requirement that any discharge petition
must come on a bill that sits in committee for 30 days. However, the
House is out of session this week, it takes time to collect signatures
once the House comes back, and even if Democrats manage find the support
of five Republicans and reach 218 signatures, then the petition must sit


**another** seven legislative days, giving almost no time to accomplish
the feat before the X-date. (The best system of government in the world,
folks.)

Executive action would be a lot cleaner and simpler. President Biden
could declare the debt ceiling unconstitutional (citing the plain
language of the 14th Amendment
<[link removed]>) or mint
the famous trillion-dollar platinum coin to obtain more spending power
(since federal law allows
<[link removed]>
the minting of platinum coins of any denomination), or simply say that
because Congress has given him conflicting legal instructions he is
going to pick the option that doesn't cause an economic crisis.
Reporting indicates that the administration is divided
<[link removed]>
about all these options.

This anxious hand-wringing over what should be a cut-and-dried
constitutional issue is symptomatic of Democrats' approach to the debt
ceiling in general. They, along with mainstream media coverage,
helplessly validate the framing of the ceiling as an ironclad legal
obstacle, when in reality it would be every bit as illegal for Biden to
respect it as ignore it. After all, Congress passed a budget in December
funding the government through September

**requiring** him to spend at defined levels. Yet this law is treated as
somehow less valid than the constitutionally questionable debt ceiling.

At any rate, we at the

**Prospect** will be watching the situation carefully to keep readers
informed of developments as they come in.

Here's some further reading:

Inside the Biden administration debates on what to do
<[link removed]>

How Kevin McCarthy kept his caucus together
<[link removed]>

How Democrats snuck in their debt ceiling shell bill
<[link removed]>


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