Once More Unto the Breach…of the Still-Useless Debt Ceiling

If you have fond memories of summer 2011 or fall 2013, do we have a treat for you: in February 2014 our nation will be taking a walk down recent-memory lane by asking, yet again, whether Congress will derail our economic recovery by convincing the world there is a serious possibility that we might fail to pay our debts as promised.

The compromise reached to end the shutdown back in October suspended the debt ceiling until today—February 7.  Most observers originally expected that we would have at least a couple more months to muddle through with “extraordinary measures” (Treasury accounting tricks of various sorts), especially since the last time around they bought us nearly 5 months after the reinstatement of the debt ceiling (from May 18, 2013, to mid-October).  But Treasury Secretary Jack Lew has now said that we only have until the end of February before we run into real trouble, since refunds for early tax filers flow out of the Treasury during this month.

Mercifully, it seems that there is a decent chance that we might get a reprise of January 2013, when House Republicans decided that they would put off a debt ceiling fight for very little in return—the only thing attached to the (then-novel) date-calibrated “suspension” in the bill was a provision requiring the House and Senate to pass budgets in order to get their pay on time.  This time around, Republicans are having a hard time deciding what demands they might make.  Some on the right who have itched for a fight in the past are now shying away from the “theater,” including Reps. Raul Labrador (R-ID) and Justin Amash (R-MI).  So there is some chance that they may simply wait to fight another day by allowing a clean increase to pass, mostly on the strength of Democratic votes.

Remarkably, however, Speaker John Boehner (R-OH) has also seriously floated the idea of attaching a reversal of recent cuts to military retirement benefits.  In other words, Republicans would demand an increase in federal spending to go along with an increase in the debt limit.  It was not so long ago that they professed to want to adhere to the so-called “Boehner Rule,” where every dollar of increase in the debt ceiling would need to be matched by an equivalent cut to federal spending.  In spite of a certain rhetorical cleanliness, that “rule” was always fiscally nonsensical and an obvious political non-starter. So Republicans are only to be congratulated for walking away from it.

But their willingness to consider attaching a fairly humdrum request for greater spending on behalf of a particular constituency (given the modest nature of the cuts, it’s inappropriate to portray it as anything else) illuminates the basic emptiness of the case for the debt ceiling.  I’ve long argued that, far from being a crucial fiscal safeguard, debt ceiling fights are a terrible distraction for fiscal conservatives likely to ensure their political defeat.  For that reason alone, legislators in both parties should consider replacing the debt ceiling with something better.  But—supposing they did attach the (unjustified) pension restoration and manage to convince the Senate and the President to pass it into law—Republicans would have established, beyond a shadow of a doubt, that there is no basic connection between the debt ceiling and fiscal restraint.  If that is so, what possible justification for the debt ceiling could there be?

Imagine what a boon it would be for the American economy to learn that there would be no more debt ceiling fights in the coming years, no more wondering (not too seriously, but at least a little) whether we were going to shoot ourselves in the foot.  Republicans could, overnight, change their party’s image by making this case to the (unfortunately skeptical) public.  Shout it from the rooftops: “Mr. Boehner, Tear Down This Ceiling!”