"Did Congress just kill the debt ceiling?" asks Annie Lowrey at The New York Times. The short answer (spoiler alert) is no, probably not. But a provision of the Default Prevention Act, passed by Congress Wednesday night and signed by President Obama soon after, is causing a lot of confusion.
First of all, Congress didn't authorize raising the debt ceiling — it suspended it entirely. Under a clause called the "McConnell rule," first proposed by Senate Minority Leader Mitch McConnell (R-Ky.) in 2011, the Treasury department can borrow as much as it needs until Feb. 7, but Congress gets a shot at blocking the debt limit within 22 days, if it chooses. (The relevant language starts on page 24.)
That's where the genius of McConnell's "bizarre-but-useful idea" kicks in, says Ezra Klein at The Washington Post.
McConnell correctly recognized that the problem with raising the debt ceiling is that nobody wants to vote "yes" on it even though a majority of the Congress ultimately needs to vote "yes" on it.... The way it works is that the president gets the power to raise the debt ceiling and then Congress gets an opportunity to take a vote of "disapproval." If that vote passes Congress, then the president can veto the disapproval rule. If Congress can muster the two-thirds majority to overturn the veto, then the president's debt-ceiling increase is rejected. [Washington Post]
This is where the confusion starts. At first glance, that looks like an effective end to the debt limit. Two-thirds of Congress isn't going to vote to send the U.S. into default on its debt, but many members can feel free to take the popular vote against raising the debt ceiling. That's how a lot of people read the law, and there was much rejoicing in the financial community.
"This amendment is a significant development for future debt ceiling negotiations as it will forever remove the uncertainties associated with prolonged and disruptive negotiations on this issue," said Millan Mulraine at TD Securities. "By design, the amendment makes future debt limit increases automatic, removing the specter that this issue could again be used by a minority as a bargaining chip in the future."
But that's not how it works, congressional aides of both parties tell The New York Times.
Come Feb. 8, 2014, "everything reverts to the previous rule, which requires Congress to raise the debt limit in some way for Treasury to increase the total amount of official borrowing," says Lowrey.
Suspending the debt is bad enough, but the bill's drafters should have stopped there, says Andrew Kloster at the Heritage Foundation's The Foundry. The following "10 pages of convoluted and pointless provisions" are just there so craven politicians can "campaign next fall claiming that they voted 'against' the debt limit increase." They didn't, Kloster says. "If a Senator or Congressman has buyer's remorse about the Default Prevention Act of 2013, he or she can and should introduce a bill to repeal it."
The McConnell rule may not have killed the debt ceiling for more than three months, but McConnell himself suggests that this whole 16-day debacle may have politically neutered it. In an interview, National Review's Robert Costa asked the minority leader if we'll have another government shutdown in January. Here's McConnell's answer:
No. One of my favorite sayings is an old Kentucky saying, "There's no education in the second kick of a mule." The first kick of the mule was in 1995; the second one was the last 16 days. A government shutdown is off the table. We're not going to do it.... We're not going to do this again in connection with the debt ceiling or with a government shutdown. [McConnell, to National Review]
Well, we'll know early next year if he's right.