Democrats Want to End ‘Insanity’ of Debt-Ceiling Fights

Congress this past week passed bipartisan legislation that suspends the $31.4 trillion debt ceiling until January 2025, pairing it with spending cuts sought by Republicans and measures related to energy projects, among other provisions. The bill passed just days before the government was set to start missing payments on its obligations, including money for seniors, federal workers’ paychecks and interest for bondholders.

The tidy resolution headed off widely feared economic fallout and market disruptions. Yet Democrats argue that unless changes are made, taking the country to the brink of default will remain a routine and dangerous part of negotiations. Some lawmakers are pressuring President Biden to act unilaterally to ignore Congress and raise the debt ceiling as needed, while others are looking to craft legislation that would limit the ability of Congress to block a debt-ceiling increase.

Using the debt ceiling to extract concessions “has been institutionalized," said Sen. Peter Welch (D., Vt.), who has called for legislation eliminating the debt limit altogether.

Rep. Brendan Boyle (D., Pa.), the top Democrat on the House Budget Committee, said there is an increasing number of Democrats who want to fundamentally change the debt-ceiling process, with many colleagues recognizing it is “just insanity to keep doing this over and over and over again."

Republicans reject Democrats’ complaints, countering that employing the debt ceiling as leverage is fair game, given that spending is one of the reasons the debt got so large to begin with. GOP lawmakers have focused on cutting expenditures, particularly for nondefense programs, and rejected Biden’s proposal to close deficits through new taxes on corporations and the wealthy.

Rep. Chip Roy (R., Texas), who sought deeper spending cuts than those in the legislation that passed this past week, said the debt ceiling was the “only current check we have." With control of Congress currently split between the parties, any legislation faces long odds to pass.

Congress created the debt ceiling in 1917 to remove itself from day-to-day financial management, giving the Treasury Department authority to borrow up to a set amount rather than passing legislation for each debt issuance. Because the U.S. consistently runs large annual deficits, the debt ceiling must regularly be raised before the Treasury can issue new debt.

Heading into this year’s talks, the White House had bitter memories of 2011, when House Republicans used the debt ceiling as leverage against Vice President Joe Biden and the Obama administration to enact the Budget Control Act, which was designed to force spending cuts in exchange for raising the debt ceiling. That year Standard & Poor’s for the first time removed from long-term debt a triple-A credit rating the U.S. had held for 70 years, citing the gloomy outlook for the country’s finances.

This time around, Biden refused for months to negotiate on the debt ceiling, insisting on a “clean" increase with no conditions. The lesson of the 2011 episode, in Biden’s view, was that negotiating over U.S. credit was too damaging to be repeated. In the end he relented and launched negotiations anyway, after House Republicans passed a bill in April that served as their opening position and as the deadline for possible default drew near.

Throughout the talks, some House and Senate liberals pushed Biden to raise the debt ceiling unilaterally by relying on the 14th Amendment to the Constitution, which says that “the validity of the public debt of the United States, authorized by law…shall not be questioned."

Republicans have said they believe the 14th Amendment doesn’t allow Biden to bypass the ceiling. “Unconstitutionally acting without Congress is…not an option," said Senate Minority Leader Mitch McConnell (R., Ky.) last month as he urged Biden to negotiate.

Biden, an institutionalist who spent decades in Congress, has long been reluctant to take unilateral action on the issue, according to people close to him. While Treasury Secretary Janet Yellen said in 2021 that she supported abolishing the cap, Biden said in 2022 that it would be irresponsible to eliminate it, and last month he said doing so would cause controversy.

In the recent debt-ceiling fight, the president ultimately opted not to invoke the 14th Amendment as an end run around Congress because he worried the resulting legal battle would have prompted widespread uncertainty and chaos in financial markets. But he has also signaled openness to testing in court whether he can invoke the amendment to prevent the debt ceiling from being used as a bargaining chip in future talks.

One area of legislative middle ground is an approach backed by lawmakers including Sen. Tim Kaine (D., Va.), who has introduced a bill to allow the executive branch to raise the debt limit, subject to a disapproval resolution by Congress. That is similar to the mechanism included in the 2011 debt deal at the suggestion of McConnell, who wanted to make sure that Democrats would be politically responsible for the increased borrowing cap.

Under the bill, the president would be able to raise the debt ceiling to cover spending authorized and appropriated by Congress, with the disapproval resolution available if Congress declines to cover bills it has already incurred. If the debt comes within $250 billion of the limit, the president would submit another certification, explaining what drove the additional debt and proposing a new limit for the remainder of the fiscal year.

“Congress should have to own the consequences of its actions," Kaine said.

Boyle said he plans this coming week to reintroduce a separate bill to give the executive branch the power to raise the debt ceiling subject to a disapproval resolution. Aside from the risks of not paying the government’s bills, he said the debt ceiling is a time-wasting distraction.

“Because we have been fixated on this issue for months and months, we are dramatically behind on all the rest of the legislative work that Congress has to get done," he said.

With any legislation likely on hold until Democrats regain control of the House, some Democrats are privately skeptical that Biden would ultimately pursue a legal test of his authority under the 14th Amendment. Biden told reporters he is considering pursuing the matter “at a later date, a year or two from now," a multiyear timeline that liberals see as a signal that he is punting on the issue.

In remarks about the debt deal from the Oval Office on Friday evening, Biden emphasized the importance of bipartisanship and didn’t address possible debt-ceiling changes.

Some Democrats argue that the debt limit still serves a useful purpose.

“I personally think we need a mechanism that forces some consideration on occasion of more responsibility," said Rep. Dean Phillips (D., Minn.), rejecting calls to abolish the debt ceiling. Controlling the debt “is not just a Republican demand—it should be a Democratic demand as well, because if we hope to invest in the future, we’ve got to stop paying so much for the past."