Democrats and the Debt Ceiling
Josh Huder | October 7, 2021
Debt ceiling politics is front and center in Congress as the US is scheduled to default on its accrued debt October 18. (For a good explainer on the debt ceiling I recommend my colleague Laura Blessing’s piece.) So far, Senate Republicans have filibustered Democrats’ attempts to raise the debt ceiling. Instead, Minority Leader Mitch McConnell insists Democrats – who control the House, Senate, and White House – can and should do it alone. McConnell supports the use of reconciliation, a non-filibusterable budget process that would enable Democrats to raise the debt ceiling alone. Notably, the reconciliation route is also far more politically attractive for Republicans than Democrats. As a result, Democrats will undoubtedly seek to avoid this path, leaving Congress heading for another dangerous impasse. This newsletter updates where we are on this impasse, with a discussion of what legislative options, including procedural reform, exist when 60 votes cannot be found in the Senate to avert fiscal disaster.
Reconciliation: legislatively complicated by bill revisions and additional votes
As a procedural matter, reconciliation could enable Senate Democrats to get around the filibuster to raise the debt ceiling. Three reconciliation bills can emerge from a single budget resolution: a spending bill; a revenue bill; and a bill raising the debt ceiling. This is also very rare– in only one year has reconciliation been used twice to pass legislation remember that for 2017, reconciliation was attempted under two different fiscal years, failing to pass an ACA repeal but succeeding to pass the 2017 tax cut. Remember also that multiple revenue bills were famously declared out of order by Senate parliamentarian Robert Dove in 2001.
Moreover, it is not automatic. The budget resolution must include reconciliation instructions to authorize any of these bills; without such instructions, none of them can get around a filibuster. Democrats did not include reconciliation instructions to raise the debt ceiling in their FY22 budget resolution. So to raise the debt ceiling via reconciliation, they would have to first pass an amended budget resolution through both chambers to include new instructions. Only at the end of that process could they move a debt limit bill.
Reconciliation: the politics are complicated
If that sounds time-consuming and laborious, it is. Passing an amended budget resolution and reconciliation bill through committee and the floor would likely take nearly two weeks, though the timeframe could be shortened given that Republicans appear willing to “go easy” on Democrats. But the time consumed by a reconciliation process is not the major concern; the bigger problem involves its politics.
The first problem is that in recent years the debt ceiling has not been “raised,” but rather “suspended.” Rather than statutorily increase allowable debt to a specific number (e.g. $30 trillion), recent congresses have suspended the debt ceiling until a specific date. While the debt ceiling is suspended, the government accrues debt as it normally does while paying its bills. When the suspension ends, the amount of debt accumulated to that date becomes the new “ceiling.” The Treasury must then employ “extraordinary measures” to avoid default and Congress has a limited time to suspend it again to another date. This approach offers the political upside of not forcing members to be on record supporting a national debt approaching $30 trillion – no one wants to be the subject of a negative campaign ad targeting such a vote.
Reconciliation: the precedent is (even more) complicated
However, suspending the debt ceiling runs into potential hurdles in reconciliation. While raising the debt to a specific number is explicitly allowed under the 1974 Budget Act, it is unclear whether Congress can “suspend” the debt limit via reconciliation. Thus, if Democrats want to deal with the debt limit via reconciliation, they either have to use the traditional route of specifying a number for the new ceiling, or take the potentially risky path of creating a new precedent or interpretation. And even if they did attempt to suspend the debt limit via reconciliation, moderate Democrats would still likely be forced to vote on Republican amendments imposing specific debt numbers. In short, addressing the debt limit via reconciliation creates several political opportunities for Republicans and multiple political complications for Democrats. It is not surprising Republicans support this path while Democrats do not. Taking procedural advice from your political opponent is most often not the best strategy.
Other options: a change of heart, or going nuclear
For now, the standoff appears to have reached a cooling point. Minority Leader McConnell offered a two-month debt ceiling extension to December, arguing this would provide more time for Democrats to pursue reconciliation. Democrats have tentatively accepted the offer but vowed to never use the reconciliation approach. Crisis may be averted in the short term. However, we will likely see another standoff in December. Democrats will continue to make attempts to suspend the debt ceiling through the regular order. Republicans will continue to filibuster.
It is important to keep in mind both parties want the debt ceiling raised. The only question is how. Two options remain: Republicans cease filibustering, which would allow Democrats to move to a majority-only final vote (détente), or Democrats create a loophole in the filibuster to enable debt ceiling increases by majority vote (the tactical nuclear option). Given Democrats’ razor thin Senate majority, eliminating the filibuster is extremely unlikely unless Republican obstruction stymied critical, must-pass legislation. Democrats’ growing threats in recent days to create a filibuster carve-out for the debt ceiling likely spurred McConnell to make his offer. On the other hand, Democrats’ willingness to accept McConnell’s offer also demonstrates their reluctance to reform the filibuster. The debt ceiling remains a must-pass priority. If Republican obstruction continues in December, during the next debt ceiling standoff, the Senate again may be on a path that erodes a small but significant part of the legislative filibuster.
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