As we jump from one cliff to the next, we are not doing enough thinking about how to move to smoother ground. The debt-ceiling debacle awaits, with the president saying he will refuse to negotiate, and the Republicans waiting breathlessly to take revenge for the deal to avoid the so-called fiscal cliff.
The Republican argument that raising the debt ceiling encourages additional future spending is logically irresponsible. The debt ceiling has to be raised to authorize spending already approved by Congress. Despite that fallacy, the GOP has been able to score political points with its argument.
That’s why I’m interested in a proposal floated by Rep. Peter Welch (D-Vt.) to reinstate the “Gephardt Rule” that eliminated debt-ceiling votes between 1979 and 1995. Under that rule, Congress doesn’t wait until we are approaching the debt ceiling to grant the Treasury Department the authorization to borrow what it needs. Instead, when Congress passes a budget resolution authorizing spending, it simultaneously approves raising the debt ceiling to cover any borrowing the budget requires. For instance, when the defense budget is passed, the same bill would require that the debt ceiling be raised. The two issues would be linked in voting and timing. Imagine the conundrum faced by Republican legislators: They want of course to vote for outsized defense spending but would be forced to recognize at that moment that the spending requires additional borrowing. No more having it both ways: voting for the spending and then sanctimoniously pretending to be against the increase in the debt ceiling.
How to effectuate this shift I leave to legislators, but linking the debt ceiling to the spending bills would be a great step.
An idea from Rep. Jerry Nadler (D-N.Y.) to simply eliminate the debt ceiling would be even better. As he argues and logic dictates, once Congress has voted for spending, the Treasury should be authorized to do what is needed in the capital markets to turn Congress’ law into action, even when Congress has not provided enough revenue through the tax code.
Neither of these ideas is likely to become law soon. Instead, another cliff ride awaits us.