The Senate’s top Republican declaring this is a big deal, potentially economically and definitely politically.
McConnell’s stand risks putting Republicans — the party that likes to champion its fiscal conservatism — in the position of being okay with letting the federal government hit a dangerous financial situation.
Republicans, however, say that because Democrats control all the levers of power in Washington and want to spend trillions of dollars, it’s on them to figure out a way to raise the debt ceiling without GOP support.
To better understand what’s going on, let’s better understand the debt ceiling.
It’s a man-made problem
The federal government spends more than it takes in. That’s why you hear lawmakers (the loudest voices of which are usually Republican) talk about how concerned they are that a particular piece of legislation will add to the deficit, the annual difference between what the government spends and takes in.
Over time, under leadership of both parties, those annual deficits have compiled into a pretty large debt. The national debt actually grew exponentially during Donald Trump’s presidency, approaching World War II levels at 128 percent of the gross domestic product. The debt started to spike even before the coronavirus pandemic forced Trump and GOP lawmakers to spend trillions to stop the economy from cratering, with Republicans’ tax plan failing to reap as much revenue as they had projected it would.
Congress controls government spending; that’s its main job. In 1917, Congress decided to give itself more control over how much the government can borrow relative to its debt. It created a law that restricted the Treasury Department from borrowing above a certain number without Congress’s approval — creating the debt ceiling. When the national debt approaches that limit, the Treasury Department needs Congress to pass a law giving it more borrowing authority to keep the government going.
Congress uses this as a political tool
It’s no surprise that when Congress inserts itself into the nation’s borrowing authority, that move becomes politicized. That’s been especially true over the past decade. During the Obama presidency, far-right Republicans reframed this typically must-pass legislation as something they weren’t willing to approve unless they got what they wanted.
In 2011, House Republicans voted down a bill to raise the debt limit unless the government slashed its annual spending. The battle actually led to the U.S. credit rating being downgraded for the first time in the country’s history. Since then, there have been pretty regular fights over the debt limit that often take the Treasury Department to the very end of its means. “Each party, when out of power, has taken it as a political hostage,” writes The Washington Post’s Paul Kane, “with Republicans being more ruthless.”
Congressional analysts say these fights don’t have much impact on lowering the national debt and arguably make things worse. “The need to raise (or lower) the limit during a session of Congress is driven by previous decisions regarding revenues and spending stemming from legislation enacted earlier in the session or in prior years,” write the nonpartisan fiscal experts at the Congressional Research Service. These fights also lower the nation’s financial standing, making borrowing even more expensive once a deal on the debt ceiling is reached.
What’s happening now
Treasury Secretary Janet Yellen said Wednesday that Congress needs to raise the debt ceiling sometime in October to avoid default. Democrats have slim majorities in both chambers of Congress, but raising the debt ceiling is not a popular vote for lawmakers to take (to the extent the public is paying attention to this).
McConnell wants to make Democrats own that vote. He’s given them two options, neither very palatable:
- Democrats raise the debt limit in a budget that they are already pursuing without any Republican votes. The problem with that, from Democrats’ perspective, is it would make an already huge $3.5 trillion bill even more expensive. They decided not to do wrap the debt-limit increase in there, though they could change their minds at any point during the next few weeks as they pass the budget.
- Democrats try to raise the debt ceiling in a separate bill, but that would require 10 Republican senators to cross the aisle to avoid a filibuster. McConnell is telling Democrats they’re not going to get those votes.
The irony — or hypocrisy, Democrats say — is that when McConnell was in power, he happily raised the debt ceiling. “We will never — we will never have America default,” McConnell said in 2018.
“Ultimately, I think the financial interests that would be badly harmed by a default and that are very supportive of the Republican Party would not tolerate that,” said David Super, a federal budget expert at Georgetown Law.
But McConnell is maintaining that because Democrats are in power, it’s their problem now.
What’s probably really going on here is a desire by Republicans to gain whatever leverage they can to make Democrats look like big-government spenders before the 2022 midterm elections. And McConnell is particularly good at putting legislative pressure on his opponents.
“McConnell has a long history of somewhat contorted moves that both try to make Democrats bear/Republicans avoid the political pain of raising the debt limit while also ensuring that the country doesn’t default,” Molly Reynolds, a congressional analyst with the Brookings Institution, said in an email.
It’s possible that Senate Democrats try to call McConnell’s bluff by wrapping the debt ceiling vote into a vote to keep the government open and to approve tens of billions of natural disaster aid to help Republican as well as Democratic states. That would make it harder for Republicans to vote no.
This has been updated to reflect the latest news. JM Rieger contributed to this report.