Why Democrats should seriously consider taking the debt ceiling hostage
It's time Republicans got a taste of their own medicine
The debt ceiling cometh.
That's the statutory limit on how much debt the federal government can have on its books. A 2015 deal between then-President Obama and Congressional Republicans gave the country a two-year hiatus from dealing with it. But time's run out and we hit the ceiling again on March 16.
The Treasury Department can buy extra time with various money-shuffling tricks. But tax receipts are coming into federal coffers slower than expected, and Treasury Secretary Steven Mnuchin recently urged lawmakers to pass a fix before the end of July.
That gives Congress less time than they thought, on top of a calendar already crowded with efforts to repeal ObamaCare and reform the tax code. And Obama has been replaced by President Trump, a grandstanding man-child who shouldn't be trusted to oversee a used car sale negotiation, much less the upcoming debt ceiling fight. A vague sense of impending disaster is thus reportedly gathering on Capitol Hill.
With all that laid out, allow me to make a completely counterintuitive suggestion: Democrats should seriously consider making this situation much worse.
At best, the debt ceiling is a superfluous instrument: To constrain borrowing, Congress can simply pass the appropriate tax and spending policy. But often, the government must borrow to pay off previous debt obligations. So at worst, refusing to pass the debt ceiling is quite literally refusing to honor the debt we've already incurred. The debt ceiling "controls" borrowing the same way that refusing to pay your credit card bill does. The entire global financial system is also effectively built upon the reliability of U.S. debt as the world's safest financial asset. Destroy that reliability, and there's genuinely no telling what would happen to the global economy.
Not to mention, refusing to pass the debt ceiling would force immediate massive cuts to bring spending in line with revenue, almost certainly inducing a recession.
All this makes the debt ceiling an enormously attractive blackmail weapon for someone crazy enough to use it: "Do what I say, or the economy gets it."
For that reason, raising the debt ceiling was long seen as a fait accompli by both parties. Sure, whenever the time came to raise the debt ceiling, the party out of power would take the opportunity to kvetch about the profligate ways of the party in power. But no one seriously considered voting against a debt ceiling hike. The split between liberals and conservatives ran through both parties, keeping partisan gridlock to a minimum and allowing compromise to win.
But American politics has realigned: The ideological divide has turned into trench warfare between the parties. Sooner or later, someone was going to realize the enormous opportunity they were missing by not exploiting the debt ceiling, and by agreeing that lawmakers should be nice to one another. During Obama's presidency, the GOP became that someone, and the norm against debt ceiling hostage-taking was shattered.
This taught Republican ideologues that using the debt ceiling as leverage works. They may not have gained all they wanted from their negotiations with Obama, but they did gain certain spending cuts and budget changes. There is no reason for them to not keep pushing: Indeed, the GOP itself is now split between the moderates like Mnuchin, who want a clean debt ceiling hike, and right-wing stalwarts like White House budget director Mick Mulvaney, who think it should come with strings attached.
How to disabuse the ideologues of this notion?
A lot of people seem to assume they can be won over by rational explanations of the debt ceiling's danger, which strikes me as absurd. What they need is to suffer the consequences of their own actions. When the GOP was out of power and did not hold the presidency, they could play with the debt ceiling with impunity. They knew that if economic disaster struck, the Democrats would be held politically responsible by the voters.
But now, with Trump in the White House, the shoe is on the other foot.
It sounds like some Democrats are realizing this. When asked by Politico, both Sen. Chris Murphy (D-Conn.) and Senate Minority Whip Dick Durbin (D-Ill.) were open to using the debt ceiling as leverage.
The internal split in the GOP itself gives the Democrats an even stronger hand to make demands, as it makes their votes more critical to forming legislative majorities. They could make raising the ceiling contingent on fixing ObamaCare's cost-sharing subsidies, or on preventing Trump's budget cuts. Heck, they could even shoot for the moon and demand the enactment of Hillary Clinton's entire presidential campaign platform.
Of course, that would be wildly hypocritical on the Democrats' part, after their many demands for a clean debt ceiling hike during Obama's administration. But that's politics: If hypocrisy came with consequences, the Republican Party would be a smoking crater at this point.
But the point here is not so much for the Democrats to achieve their policy aims as it is to remind the Republicans of the consequences of a weaponized debt ceiling.
The filibuster, for instance, bears many similarities to the debt ceiling: It's a terrible feature of America's legislative process whose destructive potential was held in check by a purely normative agreement between the parties. That agreement was undone by the same structural political shifts. And when the Democrats escalated the filibuster's weaponization, the GOP responded by simply scrapping the filibuster entirely for Supreme Court nominees.
Ultimately, the point of a confrontation over the debt ceiling is to push the Republicans to do the same: just eliminate the debt ceiling entirely, and spare the republic these cyclical crises.
I'll end by reiterating that this strategy involves terrible risk. For that reason, I wouldn't blame the Democrats for just knuckling under and agreeing to prioritize preventing a debt default above all else.
But we must also acknowledge that doing so will simply reinforce the ideologues' confidence in their hostage-taking. Sometimes enormous risks are necessary. And sometimes the best way to deal with a bully is to give them a taste of their own medicine.