Amid Donald Trump’s chaotic, last-minute intervention into congressional negotiations about government funding, he has stumbled upon a good idea: He wants to abolish the debt ceiling.
The debt ceiling, once a barely relevant bit of legal arcana, has become a dangerous weapon in American politics. It is currently due to expire in March, and the new Congress will need to negotiate a deal to extend it. Some Republicans — not all, as evidenced by Thursday’s failed vote — want to approve an extension this week as part of a year-end deal to fund the government. Democrats, with good reason, do not love that idea and also voted against the bill.
Trump’s initial counterproposal, before he lost his nerve and suggested Congress should merely extend the “ridiculous Debt Ceiling,” was to eliminate it entirely. He should stick to his guns: Getting rid of it is such a good idea that that it is worth doing now if possible — or later if not.
That’s because the debt ceiling has become the opposite of what it was intended to be. The original idea was to give the Treasury Department more leeway in managing the government’s debt. Over the decades, however, it has become a kind of straitjacket.
In the 19th century, federal bond issuances were authorized by Congress on a case-by-case basis. During World War I, President Woodrow Wilson asked Congress for broader authority: His administration wanted to simply borrow up to some amount, and then the Treasury Department would sell the bonds at its leisure. Congress agreed, and the debt ceiling was born — not as a limit on debt issuance, but as an effort to increase wartime flexibility.
And through the subsequent decades, which included the Depression and another world war, that’s how it worked. During extraordinary emergencies, Congress would authorize the Treasury to borrow what was necessary to carry out the spending plans that Congress had already approved.
It wasn’t until the 1980s, when structural peacetime deficits arose during Ronald Reagan’s presidency, that the debt limit became a kind of political football. As control of the White House and Congress oscillated between the parties, a pattern emerged: The party in power would request new borrowing authority, and the party out of power would take the opportunity to lambaste them for their irresponsibility.
But the increases in the debt ceiling always passed. For starters, it’s not like presidents were sneaking around and borrowing money on the down-low. The need for borrowing arises automatically, as a result of the interactions among the Social Security Act, various appropriations bills and tax laws.
It’s also true that, during this period, there were various legislative deals that reduced deficits through a mix of spending cuts and tax increases. But anyone sincerely interested in fiscal issues would have done this kind of work. The debt ceiling merely acknowledged obligations already incurred. Refusing to raise it was not an option — because the alternative was financial Armageddon. There was even an episode of The West Wing about it.
Things changed in 2009, when Barack Obama became president.
Full of Tea Party fervor, Republicans wanted steep spending cuts. But they didn’t want to propose steep cuts to popular programs and risk losing elections. So they decided to use the debt ceiling as leverage to force Obama to agree to huge spending cuts, hoping to transfer some of the blame to him. Obama, for his part, thought it would be smart to accept the premise that sharp debt reduction was necessary and try to ensnare Republicans into a more balanced approach that cut spending but also raised taxes. The end result was a budget agreement that did neither — and thus did nothing to address the country’s long-term fiscal problems.
Yet these Obama-era fights did succeed at something else: They showed how willing Congress was to play a game of chicken with the White House — and unleash chaos in financial markets — by refusing to raise the debt ceiling until the last possible minute. Democrats behaved more responsibly when Trump was president, but during Joe Biden’s term, the hostage-taking returned, though the Republicans’ demands were milder.
Trump is right to fear that this weapon might be turned against him. But he’s also right that the debt ceiling fundamentally doesn’t make sense. If he hadn’t suggested abolition, I would be saying that Democrats should be pushing Trump to agree to scrapping it entirely. Since he did suggest it, Democrats should take him up on it — and disregard his fallback position.
Of course it might be hard for Democrats who spent years denouncing Trump as an urgent threat to democracy to turn around and do a deal with him, although to their credit some have already said they agree with Trump. But on some level that’s just how things work in American politics. Absent bipartisan dealmaking, the government can’t operate.
That means presidents, who have a constitutional obligation to take care that the government functions, are usually interested in working with the other side when necessary. And it means that the opposition party, to the extent it can get some stuff that it wants in exchange, should be open to it. So Democrats should by all means oppose Trump when he’s wrong, but work with him when he’s right. And on the debt ceiling, he’s right.
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