Does Anyone Else Realize The Federal Debt Ceiling Was ELIMINATED?
Last week's news reports about congressional (actually...congressional Republican) action on the debt ceiling did what in the journalism business is called "burying the lead," that is, the stories typically didn't start with the most important part of what happened.
To a certain extent that wasn't surprising. As most reports said, the GOP folded its debt ceiling tent and went home. Three years after Senate Minority Leader Mitch McConnell (R-KY) began to insist that Congress would never allow the government's borrowing limit to be raised again unless Republicans got something something in return, and long after House Speaker John Boehner (R-OH) said there would be no debt ceiling increase unless he got a dollar in spending cuts for every dollar of increased borrowing authority, congressional Republicans allowed the government to borrow more without getting anything from the White House and congressional Democrats.
That is indeed a great inside-the-beltway story with a little of everything. It has conflict within the GOP, a change in politics on Capital Hill, a significant change in attitude and negotiating strategy by congressional Republicans, a successful White House and at least a tacit admission by Boehner and McConnell that their party had been politically damaged by last October's government shutdown. Add in the continuing decrease in the tea party's influence both in Washington overall and within the Republican Party in particular and you get the kind of story political reporters and columnists fall all over themselves to write.
And they did.
But while it definitely was both fun and interesting, the changing politics of the federal budget that became obvious for all to see wasn't the most important part of what happened last week. There was something far more significant: the federal debt ceiling wasn't just raised, it was eliminated until March 2015.
That's not what was said, of course, when the bill was debated in the House and Senate. Voting to "eliminate" rather than "suspend" the debt ceiling would have been a much tougher vote for many in Congress, especially for the Republicans who, as the Democrats did to a somewhat lesser extent when there was a GOP president, since the start of the Obama administration have made government borrowing into a cause celebe.
And at first glance this may seem like a distinction without much of a difference. Suspending the debt ceiling does in fact do the same thing that raising the debt ceiling to a specific number would have done: it allows the government to borrow more.
But there is an important, perhaps even crucial, difference. Because of last week's congressional action the federal government has no statutory limit whatsoever on the amount it may borrow over the next 13 months.
I'm bolding and italicizing that because that's the story that got buried. For years deficit hawks and others have said the debt ceiling is critical to controlling federal spending and had to be preserved at all costs to keep Washington in check. That often-repeated-but-never-before-tested presumption has now been shown to be completely untrue. No one -- including the most virulent anti-spending lobbies, associations and organizations -- has projected that federal spending will be higher because the debt was eliminated.
As budget process wonks have been saying the the hand for decades, the debt ceiling has nothing whatsoever to do with controlling federal spending. That's accomplished with other statutes like the Budget Control Act that put in place caps on appropriations, and with authorizations that govern each mandatory program. The debt ceiling only allows the government to borrow to make good on the spending and revenue laws that are already on the books. Not being able to borrow more in no way eliminates the government's legal obligation to spend and tax.
This real world experiment should be the beginning of the end of the debt ceiling. It should be obvious by the time the suspension ends a year or so from now that not having a debt ceiling means nothing and causes no damage. Wall Street would applaud it being totally eliminated because the prospect of another debt ceiling showdown would be eliminated.
And congressional Republicans and Democrats alike should now be able to realize that the debt ceiling is nothing more than a vestigial organ of federal budgeting. It may have been important in a previous era, but it no longer serves any practical purpose.
Members of Congress should also realize that they could always vote to re-impose a debt ceiling if it became important again for some reason.
This isn't likely to come up before the November 2014 election. Frankly, it's not at all clear that either political party would have the testicular fortitude to get out in front on the issue.
If it happens at all, it will have to be a something that both parties join together to offer in the lame duck session of Congress that is virtually inevitable this year.
That sounds to me like a perfect next step for House Budget Committee Chairman Paul Ryan (R-WI) and Senate Budget Committee Chairwoman Patty Murray (D-WA) -- who took so much pride in the last budget deal -- to consider.