Exactly three weeks ago today, House Speaker John Boehner’s (R-Ohio) made a straightforward declaration: “A ‘clean’ debt limit increase simply won’t pass in the House.”
So much for that idea. Late yesterday, the House did, in fact, raise the debt limit through March 2015. After several weeks in which Republican lawmakers said they would block an increase unless Democrats paid some kind of ransom, the GOP-led chamber threw in the towel, allowed the increase to pass with mainly Democratic support, and quickly left town for two weeks.
There’s no shortage of interesting angles to this entirely predictable fiasco. We could note, for example, how misguided it was to watch Republicans launch a fight they knew in advance they were going to lose. We could also note how remarkable it is that 166 GOP lawmakers voted for their budget plan last month, but only 28 GOP lawmakers voted to pay for the spending they just approved – making the party’s claims to “fiscal responsibility” somewhat odd. We could even explore the latest example of Boehner becoming the weakest Speaker in modern times.
But there are two broader takeaways that I hope the political world will keep in mind going forward. First, we’ve very likely seen the end of debt-ceiling extortion. Greg Sargent’s take rings true.
The crucial point about this outcome, should it happen, is that it will be the direct result of the decision by Dems – in the last two debt limit fights – to refuse to negotiate with Republicans…. Now that this realization has driven Dem strategy through two debt limit fights, it may not be too soon to pronounce GOP debt limit extortion dead.“The era of economic hostage taking and ransom demands should finally be behind us,” Senator Patty Murray told me today.
Once President Obama decided to show real leadership on this issue – making a firm declaration that he would not negotiate with policymakers threatening deliberate harm to the nation, and then sticking to that position – the dangerous game was over and a new standard was set in stone.
Now that it’s painfully obvious that the leaders of both parties have no intention of deliberately trashing the full faith and credit of the United States, the incentive to hold the nation hostage has evaporated. Congressional Republicans hopefully enjoyed this fight, because they won’t see another one like it.
Second, it’s time – indeed, it’s past time – for a conversation about scrapping the debt ceiling altogether.
Remember, the existence of a statutory debt limit is a bizarre accident of the American system, and most modern economies around the world benefit from not having one at all.
The process currently in place is needlessly convoluted: the legislative branch authorizes the spending and the executive branch spends the money. But the executive branch then needs to return to the legislative branch to seek permission to borrow the resources necessary to finance the spending – which is not only inherently ridiculous, it also invites dangerous mischief.
The result is the creation of a political weapon, capable of catastrophic consequences. For nearly a century, neither party was willing to pick that weapon and threaten to use it, but congressional Republicans broke new ground in 2011, putting their finger on the trigger for the first time.
We now know that they don’t intend to pull that trigger, which is certainly reassuring, but at the same time, raises the obvious question of why the political weapon continues to exist at all.
There are several options lawmakers can pursue in reforming and/or eliminating the debt-ceiling law. The sooner they act on one of them, the more confidence the world, markets, and investors can have that the United States will never default on its obligations, regardless of the manufactured political crises of the day.