The unprincipled history of the debt ceiling
The centrist Third Way think tank published a chart Thursday that shows in one quick glance how much of a political football the federal debt ceiling has become in the past decade.
In 2002 and 2007, when Republicans held the White House and Democrats controlled the Senate in 2002, the vote to raise the debt ceiling was solidly bipartisan. But when the Senate and the White House were controlled by the same party from 2003 to 2006 and from 2009 to 2010, the votes were virtual party-line affairs. On five votes to raise the limit, no more than three members of the minority party joined with the majority to increase the limit.
In other words, lawmakers whose party was fully in command dutifully voted to increase the debt ceiling, while those who were out of power felt no compunction to support them. That might make sense from a "not my problem" perspective -- the budget, tax and spending bills that determine whether the country will slip further into debt are controlled by the majority party. If it's not your mess, why should you have to clean it up?
But there's a larger principle at work. As I argued last week, the debt-ceiling vote is about honoring the commitments lawmakers have already made through their votes on the aforementioned budget, tax and spending bills. For example, every member of the House GOP is now on record favoring an increase in the debt subject to the ceiling in each of the next 10 years -- that's how much additional debt they voted for in the fiscal 2012 budget resolution.
Many lawmakers appear to be trying to walk the fine line between acting like deficit hawks and avoiding any suggestion of a default. You'd be hard-pressed to find a member of Congress today who doesn't want to tackle the deficit. But there is a yawning chasm between the approaches favored by Republicans and those favored by Democrats. The question, then, is whether it's OK to hold the debt ceiling hostage in order to win the fight over those dueling plans.
I don't think so. Bringing the federal budget back into balance will take years, and the political winds could shift multiple times during that period. To have any chance of succeeding over the long haul, a deficit-reduction plan has to have solid bipartisan support -- and take steps that are politically risky for both parties, such as curbing the growth of Medicare. Although lawmakers could conceivably agree to such a plan this year, they won't do so before we reach the current debt limit.
Third Way President Jon Cowan says it's not unreasonable for members of Congress to use the debt-ceiling vote to push for firm deficit-reduction plans or targets. Nevertheless, he said, "It's reckless and irresponsible for members of either party to even threaten, much less vote against, raising the debt ceiling. It was wrong for Sen. Obama to do so in 2006, as he just acknowledged and said he regrets. It's wrong now for Majority Leader [Eric] Cantor [R-Va.] to, as Politico reports, 'talk of plunging the nation into default.' The debt ceiling vote has become far too partisan; but it's time to set a new, consistent, bipartisan standard in which default is simply neither a threat nor an option." (I added the links, they weren't in Cowan's statement.)
An interesting dissent comes from Walter Cruttenden, a former investment banker who contends that markets would welcome GOP efforts to use the looming debt-ceiling threat as a way to force through large spending cuts or some other step to reduce the deficit. "Foreign investors have been increasingly wary of U.S. fiscal policy as evidenced by the decline of the dollar versus gold and foreign currencies. If we were serious enough to not increase the debt limit until we had a reasonable budget agreement, the result would likely be 'increased' credibility, not a loss of credibility," he wrote Wednesday on the Business Insider blog.
Of course, if he's wrong and the risk of default drives up the interest rate on T-bills, the country's deficit and debt problems will only grow. This particularly political game has very high stakes.
-- Jon Healey
Credit: Third Way website.