This week’s Capitol Hill summary: The Republican caucus is going to force the Democrats to own the debt ceiling increase as well as the infrastructure package and the fiscal year 2022 budget. The idea is that Biden’s big spending agenda will have to be passed by Democrats only and the fiscally responsible Republicans will preach to the folks at home that inflation and economic woes are looming and pull out major wins at midterms for their restraint and good sense.
Thing is, fiscally conservative congressional Republicans are in short supply. I hate to say it, but federal spending grew to its highest level ever during the Trump administration, with full support of the GOP caucus. And that wasn’t a new trend. Republicans have been voting for bigger budgets since the 1980s, right with their Democratic colleagues.
The debt ceiling is another matter. Raising the debt ceiling isn’t increasing the national debt precisely. Nor is it increasing spending. The matter is about permitting the Treasury to raise more funds to service our current debt; that is, to cover spending that has already taken place. The national debt has already grown. It grew under the Trump administration before the pandemic, with a combination of lower taxes and increased spending. It grew during the pandemic with the first stimulus.
Congress voted in 2019 to increase the debt ceiling. After the 2020 election the debt grew again with the second stimulus, passed by Congress just before Christmas. The two monster spending bills that President Biden is trying to pass have nothing to do with our current debt situation. Thursday, Republicans agreed to raise the debt ceiling temporarily—just through December—to stave off a default on our debt which would occur around Oct. 18.
Essentially, Congress can do the following regarding the debt ceiling: vote to raise it; vote to not raise it or default on our debt; or vote to eliminate the requirement for a debt ceiling altogether which would give the Treasury more flexibility. Every time the country has hit the ceiling in the past, Congress has chosen the first option. Defaulting would place our economy in a serious recession and destabilize global markets. Eliminating the ceiling altogether is the other nuclear option threatened from the Democratic side of the aisle.
In previous debt ceiling battles, congressional Republicans took some sort of stance regarding the budget when negotiating for an increase. In 2011, the debate resulted in the Budget Control Act, which created automatic discretionary budget limits, also known as the sequester.
(The BCA should have cut $1 trillion in government spending. Of course it didn’t, as President Obama and Congress simply raised discretionary spending caps in 2013 and 2015, and when those higher caps expired in 2018, President Trump and Congress raised them higher still, and again in 2019. The sequester expired this year. Hooray! said Congress and the White House.)
This year’s debt ceiling debate has no origin in fiscal restraint. Senate Majority Leader Mitch McConnell simply wishes to force a simple majority vote through the budget reconciliation process so that only Democrats will be voting to increase it permanently. He and the GOP caucus also wish for only Democrats to be voting on the two large spending bills on the table, counting on fiscal restraint helping to push seats into the red zone in 2022.
Should McConnell be playing this correctly, and the GOP picks up the House or the Senate in 2022, the caucus will face an interesting dilemma. The debt ceiling will need to be raised again in 2023. What if the Democrats pull the same stunt then, forcing Republicans to be the only ones to vote to raise the debt ceiling? One thing I do know for sure: Republicans aren’t shy about fiscal liberalism when they’re in the majority.