Limitless

Hang on for a minute...we're trying to find some more stories you might like.


Email This Story






We all know what the three least common words in the English language are: Congress did something.  But last week, both houses of Congress agreed to raise the nation’s borrowing limit without delay, without any fuss, and most importantly without any hostage taking.  Though this progress was largely due to President Obama’s refusal to negotiate, his position is unsustainable and he needs to eliminate the debt ceiling.

The only reason Congress cleanly raised the debt ceiling was because of President Obama.  In the past, voting to raise the debt ceiling was routine, because most legislators understood a default would be horrible.  But in 2011, House Republicans used the threat of a default to extract policy concessions from the President.  They wagered he could not tolerate a default, so he would fold if they attached spending cuts to raising the debt ceiling.

The President tried to reach an agreement. Instead, the threat of default forced him to stomach massive spending cuts and conceding to almost all of the House Republicans demands.  President Obama’s call for civility in 2011 was met with colossal failure.

So, President Obama gave the House Republicans a taste of their own medicine, and refused to negotiate over the nation’s debt obligations.  But then the President refused to negotiate over the debt ceiling.  Any increase had to be “clean.”  House Republicans also feared a default, and so they would raise the debt ceiling without concessions if they had no other choice.  President Obama’s stance paid off.  Each of the four attempts to get concessions out of the President have failed.

While this strategy works very well, it puts our creditworthiness in the President’s hands.  President Obama has veto power over the debt ceiling and nobody wants default.  So if he refuses to sign anything with policy attachments, the debt ceiling will likely get a clean raise.  But this works both ways.  Imagine in 2016, our newly elected president threatens to veto any debt limit increase that does not also raise taxes. Or audit the Federal Reserve. Or defund the IRS.  The demands are limitless and damaging.  No Congress, let alone a grid locked one, could come up with policy concessions that would disproportionately affect their political party.

Or, think about 2014.  If the Republicans gain back a majority in the Senate, President Obama’s plan falls apart.  The Democratically controlled Senate acts as a stumbling block for any debt limit increase with additional policies attached.  But if the Republicans regain control of the Senate, they could ram through as many partisan debt limit increases as they want.  Eventually, President Obama would fold under the pressure or the country would default.  If you thought we were on the brink of default now, imagine the possibilities the future holds.

The very existence of the debt limit brings us closer to default.  If the Senate flips to a Republican majority, or a president uses it to extract policy, it could tip us over the edge and the global economy would follow.  While President Obama’s strategy of not negotiating works well, it is better to do away with the archaic debt ceiling entirely.  The last thing we need is the threat of total default constantly hanging over our heads.

Print Friendly, PDF & Email