There are many ways, aside from national default or House Republicans’ capitulation, in which Washington’s debt limit fight could end. But they are almost all bad. If Republicans continue to hold hostage the nation’s full faith and credit, the parties will have to spend months figuring out which subpar off-ramp to take.
President Biden should resist, to the extent possible, entrenching the principle that debt limit hostage-taking is a legitimate way for politicians to extract concessions from their political rivals. And Americans should recognize who is forcing the nation to choose between unappetizing resolutions: House Republicans, who are not even pursuing a well-defined policy goal, let alone a rational one.
The worst outcome, of course, would be if House Republicans refuse to lift the debt limit. The market response would be ugly, and the consequences would include more expensive borrowing costs for the U.S. government. In other words, House Republicans, who claim they are holding out to save the American public money, could saddle taxpayers with billions of dollars in new interest costs by failing to increase the debt ceiling on time — and that is only the most predictable consequence of the turmoil that would result.
GOP lawmakers portray their effort as a moral crusade to rein in reckless spending. It’s not. The debt limit, which sits at $31.4 trillion, needs to be raised to pay for all the tax cuts and spending that Congress already approved.
The vast majority of the nation’s $31 trillion debt comes from bipartisan spending increases and deficit-financed tax cuts. Republicans point to Mr. Biden’s $1.9 trillion American Rescue Plan. Meanwhile, Democrats identify President Donald Trump’s $1.9 trillion Tax Cuts and Jobs Act. Both parties omit that they jointly passed $3 trillion in pandemic aid, $800 billion in Great Recession aid, more than $3 trillion in George W. Bush-era tax cuts (and the bipartisan extension of many of them), and trillions in spending on the wars in Iraq and Afghanistan.
Congress has adjusted the debt ceiling more than 100 times since World War II. Raising the debt limit has almost never been front-page news. One of the exceptions occurred in 2011, when Republicans, after years of ignoring the ballooning debt while Mr. Bush was in office, suddenly cared about it when Democrat Barack Obama was president. Republicans pushed the country to near-default in 2011, resulting in a permanent downgrade of the nation’s debt rating and costing taxpayers over $1 billion in higher borrowing costs. Mr. Obama ultimately negotiated with Republicans to raise the debt limit in return for enacting indiscriminate, broad-based spending caps. This is the sorry episode that House Republicans now seek to repeat.
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In a rational world, Republicans and Democrats would lift the debt limit now so there is no chance of default. Then Congress and Mr. Biden would launch negotiations to pass a budget that improves the country’s long-term fiscal balance.
Short of this ideal, there are other potential ways out of the impasse — just not many good ones. The notion that an obscure federal law allows the Treasury to mint a trillion-dollar coin is a gimmick that investors and credit agencies, not to mention the American public, would dismiss. If Mr. Biden moved unilaterally to continue issuing federal debt, citing passages in the Constitution seemingly forbidding federal default, he would invite a destabilizing legal crisis.
It’s technically possible that a handful of House Republicans representing swing districts could band with Democrats to force a vote on a clean debt ceiling hike, employing a rarely used maneuver known as a discharge petition.But this would require a lot of precise parliamentary maneuvering over the heads of House GOP leaders, not to mention a surprising degree of bipartisan cooperation. Lawmakers should keep the option open, but relying on it would be dangerous.
Then there is the possibility of some negotiated settlement of spending cuts alongside the debt ceiling increase, which would further legitimize the tactic of holding hostage the nation’s credit for political ends. It is not even clear House Republicans can begin negotiating yet. If House Speaker Kevin McCarthy and his GOP colleagues were serious about reducing the deficit, they would at least agree to a short-term debt ceiling increase that gives Congress and the White House time for real budget talks heading into the fiscal year that begins Oct. 1. So far, they have yet to produce even a list of proposed cuts beyond defunding the Internal Revenue Service, which would likely result in lower tax revenue and wider budget deficits. Mr. McCarthy has also said that Republicans would not seek changes to old-age entitlements such as Medicare, the real drivers of long-term budget instability.
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End of carouselAlso on the Editorial Board’s agenda
- The misery of Belarus’s political prisoners should not be ignored.
- Biden has a new border plan.
- The United States should keep the pressure on Nicaragua.
- America’s fight against inflation isn’t over.
- The Taliban has doubled down on the repression of women.
- The world’s ice is melting quickly.
Ihar Losik, one of hundreds of young people unjustly jailed in Belarus for opposing Alexander Lukashenko’s dictatorship, attempted suicide but was saved and sent to a prison medical unit, according to the human rights group Viasna. Losik, 30, a blogger who led a popular Telegram channel, was arrested in 2020 and is serving a 15-year prison term on charges of “organizing riots” and “incitement to hatred.” His wife is also a political prisoner. Read more about their struggle — and those of other political prisoners — in a recent editorial.
The Department of Homeland Security has provided details of a plan to prevent a migrant surge along the southern border. The administration would presumptively deny asylum to migrants who failed to seek it in a third country en route — unless they face “an extreme and imminent threat” of rape, kidnapping, torture or murder. Critics allege that this is akin to an illegal Trump-era policy. In fact, President Biden is acting lawfully in response to what was fast becoming an unmanageable flow at the border. Read our most recent editorial on the U.S. asylum system.
Some 222 Nicaraguan political prisoners left that Central American country for the United States in February. President Daniel Ortega released and sent them into exile in a single motion. Nevertheless, it appears that Mr. Ortega let them go under pressure from economic sanctions the United States imposed on his regime when he launched a wave of repression in 2018. The Biden administration should keep the pressure on. Read recent editorials about the situation in Nicaragua.
Inflation remains stubbornly high at 6.4 percent in January. The Federal Reserve’s job is not done in this fight. More interest rate hikes are needed. Read a recent editorial about inflation and the Fed.
Afghanistan’s rulers had promised that barring women from universities was only temporary. But private universities got a letter on Jan. 28 warning them that women are prohibited from taking university entrance examinations. Afghanistan has 140 private universities across 24 provinces, with around 200,000 students. Out of those, some 60,000 to 70,000 are women, the AP reports. Read a recent editorial on women’s rights in Afghanistan.
A new study finds that half the world’s mountain glaciers and ice caps will melt even if global warming is restrained to 1.5 degrees Celsius — which it won’t be. This would feed sea-level rise and imperil water sources for hundreds of millions. Read a recent editorial on how to cope with rising seas, and another on the policies needed to fight climate change.
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We have argued that the nation’s long-term fiscal path is bleak and that the parties should impose a mix of tax hikes and benefit adjustments to ensure the government can keep its promises to retirees while continuing to invest in future generations. But that is a separate issue from the debt ceiling; no matter the federal budget outlook, the nation’s full faith and credit should be sacrosanct.
Instead of forcing the country into default, or into a less-bad-but-still-unattractive alternative, House Republicans should simply stand down. And, however this debt ceiling fight ends, there is only one reasonable long-term move: Congress should permanently eliminate lawmakers’ ability to use the debt limit to gain political leverage, either empowering the treasury secretary to raise it, subject to a congressional disapproval vote, or abolishing it entirely.