Editorial: Democrats should scuttle the debt ceiling before America hits the fiscal brink
They aren’t saying it publicly, but behind the scenes, congressional Republican officials and business leaders are bracing for the nightmare scenario of a debt ceiling crisis potentially worse than the one in 2011 if the GOP retakes the House this year. That’s according to an Axios piece that pays special attention to Rep. Jason Smith, R-Mo., who could be in line for a key budgetary post in a Republican-led house. Smith tells the website bluntly that he thinks holding the nation’s fiscal stability hostage is a valid political strategy to force policy changes on the Biden administration.
Add it to the long list of reasons a Republican House takeover could be disastrous for America — though that danger would be mitigated if Democrats were to finally get rid of the whole debt ceiling concept now, while they control Congress.
The debt ceiling is the amount of money the treasury is allowed under law to borrow to cover America’s financial obligations. The ceiling has routinely been raised over the years as those obligations have increased, a process that used to be uncontroversial. That has changed in today’s deeply divided Congress, with Republicans occasionally seeking leverage over Democratic presidents by threatening to refuse to raise the limit when it’s needed.
It’s important to stress (because Republican fiscal warriors love to obfuscate this fact) that refusing to raise the debt ceiling is not the same as refusing to take on additional debt. It’s more akin to refusing to pay a loan or a credit card bill for spending that has already happened. That would mean a U.S. default on its financial obligations, which would very likely lead to a global financial meltdown.
Even talking about that is the height of political irresponsibility. But Republicans came close to actually doing it in 2011, in their quest to stymie then-President Barack Obama at every turn. Although a last-minute agreement was finally hammered out to raise the ceiling so America could pay its bills, the mere threat of a federal default caused turmoil in the financial markets, resulted in the nation’s first credit downgrade in history, and added billions to the cost of government borrowing.
In the Axios piece, Republican sources and others questioned whether House Minority Leader Kevin McCarthy, should the Republican become House speaker, would have the will to stand up to the bomb-throwers in his own caucus (as then-Speaker John Boehner finally did in 2011) to avert a debt ceiling crisis. The signs aren’t good.
Some have called for removing the debt ceiling altogether, since it serves no real purpose today except as a recurring fiscal time bomb. Facing the real chance that Congress next year will be controlled by a radicalized GOP willing to burn down America’s fiscal house in order to burn the Biden administration, Democrats should get rid of this threat now, once and for all.