A Prospect newsletter about the debt limit
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At Least Free the Debt Ceiling Hostage

Today's X-Date PM: If the White House is so interested in a bipartisan
deal, it should include a mechanism to end these crises permanently.

 

 

Samuel Corum/Sipa USA via AP Images

By David Dayen

**** With the White House's contestation
<[link removed]>
of the only preemptive legal resolution to the debt ceiling crisis, I
think we can put the idea of unilateral action at least on the back
burner, if not in the garage. The administration has put itself in the
position of negotiating with legislative terrorists. And the House GOP
has been refreshingly clear on this point by calling themselves
legislative terrorists, through their actions and explicitly with their
words.

A four-page ransom note
<[link removed]> out
this morning from Freedom Caucus Rep. Chip Roy (R-TX) essentially
demands everything in the Limit, Save, Grow Act, which passed by the
skin of its teeth in the House in April. "My conservative colleagues for
the most part support Limit, Save, Grow," blurted out
<[link removed]> Rep.
Matt Gaetz (R-FL), "and they don't feel like we should negotiate with
our hostage." A finer distillation of the Republican position could not
be found. They found something valuable and they're going to get as
much for it as possible.

What's the Democratic position? This statement
<[link removed]>, which
got a retweet from the White House messaging operation, is a good
summary. They've talked themselves into freezing discretionary
spending at current levels (the Goldilocks position in between the White
House budget's increases and the GOP's cuts); the actual White House
offer <[link removed]>
was a freeze of FY2024 spending at FY2023 levels, and a 1 percent
increase for FY2025. The GOP wants to roll this back to FY2022 levels
and keep the 1 percent cap for ten years, though that's been softened
to six
<[link removed]>.
Even the White House plan would be a real cut in spending from the
current baseline by over $1 trillion over the next decade.

Democratic House Leader Rep. Hakeem Jeffries (D-NY) added that "Dem
priorities need to be included in order to win Dem votes on the floor."
The working assumption is that as many as 100 House Democrats
<[link removed]>
would be needed for passage.

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

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

Let's sit for a minute and consider the insanity of this. The far
right is openly hijacking the global economy, and everyone knows that
none of the intellectual thought leaders of the enterprise, the guys
holding the metaphorical box cutters, are going to vote for the bounty
they receive!

I didn't make that decision, but clearly that's where we're
headed. So the question is, what "Dem priorities" are going to be
included? If you ask House Republicans, well, none of them. "Asked
Tuesday evening what Republicans were offering to get Democratic votes,
Rep. Patrick T. McHenry (R-N.C.) gave a brief answer: 'The debt
ceiling,'" Jeff Stein reported
<[link removed]>
in

**The Washington Post**. Rep. Garret Graves (R-LA), who with McHenry is
in the negotiating room, agreed. "That's what they're getting," he
said.

Indeed, Republicans have rejected numerous tax increases, loophole
closures, and increases in drug price reform. They're not interested
in giving an inch, and given that they've got the White House to
effectively agree that there's no alternative but a deal, why should
they?

But this is an impossible circle to square. Republicans get trillions in
spending cuts, Democrats get "the debt ceiling" and nothing else, yet
100 Democrats have to vote for it. That would be political suicide for
Democrats with their base. Is there even a possible solution here?

One answer has a nickname: the Gephardt rule
<[link removed]>.

In 1979, Dick Gephardt had a problem. His job was to whip votes in the
House for an increase in the debt ceiling, and the majority Democrats
didn't want to do it. So he came up with a solution. Every time
Congress passed a budget, it would include a joint resolution deeming
the debt ceiling raised to the level necessary to cover the shortfall in
that budget. The idea was simple: If Congress votes appropriations in,
that is the logical time to increase the debt ceiling to ensure that
those bills will be paid.

The Gephardt rule was only in place for the House, but from 1979 to
1995, it created 15 joint resolutions to raise the debt ceiling. The
Senate concurred with about half of them. The Gingrich House suspended
and repealed the Gephardt rule during Clinton, then reinstated it in the
Bush years, and then the Tea Party House repealed it again under Obama.

Obviously, when it's just a House rule, it's simple to move it in or
out depending on political strategy. But if it's a statute, binding on
the House and the Senate, then the debt ceiling can be blunted as a
political weapon.

[link removed]

In reality, that's the bare-minimum ask here. Republicans have said
that Democrats will get nothing but the debt ceiling. They are engaged
in an extortion effort. Well, in most hostage situations I'm familiar
with, successful resolutions end with releasing the hostage. They
don't end with the hostage being released for a year or two, only to
be sent back zip-tied into the captors' basement once more.

That's what Republicans want to do. They want to get their pound of
flesh from this negotiation, and reserve the right to get another pound
of flesh later, and again still later. That should be completely
unacceptable. If we're doing a negotiation (which certainly isn't my
first preference), it should end with a permanent dissolution of the
debt ceiling as a tool, or at least as permanent as you can get. Nobody
can bind future Congresses, but codifying the Gephardt rule would put
Republicans in the difficult position of having to affirmatively pass
the mechanism for an extortion attempt.

This would deliver significant economic benefits. Just the threat of a
debt default raises U.S. borrowing costs and dampens investment
<[link removed]>.
The 2011 near-default caused a $2.4 trillion hit
<[link removed]>
to the stock market, by one estimate, to say nothing of higher interest
payments. Removing the possibility of chronic default crises is probably
the only thing that would re-instill investor confidence.

Republicans will resist this as fully as they would anything else. But
Democrats have not rallied around a single ask. They have made these
minor offers about tax loopholes or drug prices, really as a fig leaf so
they can sell it to their caucus and their base. That's not going to
work; ending carried interest or something isn't going to make anyone
forget about trillions in spending cuts. The real tax fight, when the
Trump tax cuts expire in 2025 and $3.5 trillion in revenues
<[link removed]>
can be restored, will come later anyway.

In the context of this hostage situation, the appropriate ask is to
release the hostage, forever. No Democrat should agree to anything
without that as the bare minimum. The deal is distasteful, but if it's
the

**last** deal, the taste gets a little less bitter.

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