President Obama included McConnell's plan in one of his early fiscal-cliff offers.
There are a few differences between Obama's plan and McConnell's initial proposal. First, McConnell's forced the president to send Congress a package of spending cuts that were larger than his debt-ceiling increase, though it didn't matter whether they passed or not. The White House has dropped that. Second, McConnell's proposal was only good for three debt-ceiling bumps. Obama's team has removed that limit, so it works in perpetuity.
But the underlying mechanism remains the same: Congress can disapprove of the president's decision to raise the debt ceiling, but unless they can overturn his veto, they can't stop him.
The effect of this policy would, in general, be to finish off the debt ceiling. Republicans are laughing this off as a ridiculous, pie-in-the-sky proposal. McConnell abandoned this plan shortly after he proposed it, and he certainly doesn't support it now. But it's actually a great idea — one that could do more to protect our economy than anything else Congress could pass. Even better, it would cost us nothing. Measured by its cost-effectiveness, it's perhaps the best idea in American politics today.
The debt ceiling is an anachronism. It's an accountability mechanism from the days when Congress didn't much involve itself in federal budgeting. Today, Congress exerts full control over the federal budget. The debt ceiling isn't imposing accountability on the executive but calling into question whether Congress will pay the bills it has already chosen to incur.
But it's not an adorable anachronism, like grandfather clocks. It's a dangerous one, like bloodletting, lobotomies and burning people you suspect to be a witch. If we crash through the debt ceiling, a global financial crisis could — and likely will — result. Even once we return to sanity and begin paying our bills again, America's borrowing costs are likely to be permanently higher, and the market's confidence in our political system is likely to be permanently harmed. The Bipartisan Policy Center estimates that the near-miss we had in 2011 cost us $18.9 billion. That's $18.9 billion we spent for no reason. It didn't buy us one service or lower taxes by even a dime.
It's time to get rid of the debt ceiling. And don't take it from me. Take it from the policymakers who've had to deal with the debt ceiling, like Alan Greenspan:
DR. ALAN GREENSPAN: I have a more fundamental question. Why do we have a debt limit in the first place? We appropriate funds, we have tax law, and one reasonably adept at arithmetic can calculate what the debt change is going to be.
MR. GREGORY: Mm-hmm.
DR. GREENSPAN: The Congress and the president have signed legislation predetermining what that number is. Why we need suspenders and belts is something I've never understood. And ...
MR. GREGORY: But now that we've got them, the question is?
DR. GREENSPAN: Well, now, now that you've got them, the question essentially is: There is a major problem in cutting spending. And anything that works, in my regard, is probably helpful. The difficulty that I have is, you cannot have a position which stipulates that, "I will never allow the United States to default. But on the other hand, I will not allow the process to go forward unless there are additional actions with respect to the debt."
MR. GREGORY: So you can't let it default?
DR. GREENSPAN: Well, you can, but you shouldn't.
Former treasury secretary Robert Rubin agrees. As do some of his successors, including Larry Summers and Paul O'Neill. "It is hard to make a rational argument for the debt ceiling," O'Neill has said.
The "rational argument" for the debt ceiling is that the minority party can use it to extract policy concessions from the majority party, as Republicans did in 2011. In other words, the argument for the debt ceiling is that we should enter the American economy in a never-ending game of Russian roulette because whichever party a majority of Americans didn't vote for wants to keep its shot at the winnings. That's not a very good argument.
It's long past time to get rid of the debt ceiling, and the McConnell-Obama plan is as good a way as any to do it. It gives lawmakers more than a chance to avoid the fiscal cliff. It gives them a chance to end America's repeated flirtations with fiscal suicide.
This is an updated version of a piece Wonkblog published in 2012.