The Democrats’ lame-duck debt ceiling options

How to dismantle an economic bomb on a party-line vote

With Republicans projected to retake an extremely narrow majority in the House of Representatives, congressional Democrats are searching for ways to neutralize the possibility of high-stakes games of chicken with the country’s self-imposed debt ceiling. I wanted to catalog some of the legislative options for Democrats to disarm the debt ceiling before Republicans take over the House in January.

Here is the text of the debt ceiling statute (codified at 31 U.S.C. § 3101(b)):

(b) The face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) may not be more than $14,294,000,000,000,*** outstanding at one time, subject to changes periodically made in that amount as provided by law through the congressional budget process described in Rule XLIX [1] of the Rules of the House of Representatives or as provided by section 3101A or otherwise.

(***Because of a series of temporary increases, the actual debt ceiling amount is currently around $31.4 trillion.)

There is reportedly some hope among Democrats that there may be room to pass a debt ceiling increase through regular order — meaning with sixty votes in the Senate. That would require Senate Minority Leader Mitch McConnell to give his blessing to such a deal, and for ten fellow Republicans to join him in support. I suppose it is possible that the razor-thin numbers in the House have convinced Kevin McCarthy that his caucus can’t be trusted with the live bomb that is a debt ceiling negotiation, and he could give a low-key okay to McConnell to take the issue off the table for two years. But it also seems deeply uncharacteristic for McConnell and his caucus to just give away one of their party’s only sources of legislative leverage for the next two years.

So a bipartisan deal to clear away the debt ceiling until 2025 seems unlikely. Setting that aside, any movement would need to be achieved through a Democrats-only reconciliation package this winter. Under the Budget Act, changes to the debt ceiling can be made with just a majority. Here’s the relevant text (codified at 2 U.S.C. 641(a)]:

A concurrent resolution on the budget for any fiscal year, to the extent necessary to effectuate the provisions and requirements of such resolution, shall … (3) specify the amounts by which the statutory limit on the public debt is to be changed and direct the committee having jurisdiction to recommend such change.

How can Democrats use reconciliation to modify the debt ceiling? I see essentially four options across two strategic categories:

Category 1: Delay

These options would punt the debt ceiling into the next Congress — meaning 2025 or beyond. There are two ways of doing this:

Suspend the debt ceiling until 2025 (low political risk, uncertain legal risk): As the Congressional Research Service observed in a recently updated report, Congress’s preferred way of dealing with the debt ceiling in recent years has been to suspend it for a period of time, rather than increasing it. “Since early 2013, seven bills have suspended the statutory debt limit, and one has been enacted to increase the debt limit,” according to CRS. However, it is unclear if such a suspension is permissible through reconciliation under the Budget Act, which only allows reconciliation bills to “specify the amounts by which the statutory limit on the public debt is to be changed.” The Senate Parliamentarian could reject this because a suspension doesn’t change the “amount”; on the other hand, she could permit it because a suspension has the same policy impact as increasing the amount. There is no definitive Senate precedent on this question.

Increase the debt ceiling to a figure unlikely to be reached until 2025 (moderate political risk, no legal risk): Rather than suspending the debt limit through 2025, Congress could do the functional equivalent — and remain on safer procedural ground — by increasing the allowable amount. The CBO projects that the national debt subject to the debt ceiling will be around $34.2 trillion in 2025. Democrats could enact reconciliation legislation this winter adjusting the debt ceiling to something north of that amount. While somewhat more politically painful than a vote to suspend (rather than raise) the debt limit, this is unquestionably permissible through the budget reconciliation process.

Category 2: Destroy

Instead of kicking the can down the road, Democrats could seek ways to do away with the pointlessly dangerous debt ceiling altogether:

Increase the debt ceiling to “a gazillion dollars” (high political risk, no legal risk): Under reconciliation rules, Democrats cannot literally repeal the debt ceiling from the statute books. But they could effectively do so by raising the debt ceiling to some unreachable, far-off amount. Increasing the debt limit to infinity will seem absurd, much like the idea of minting a trillion dollar platinum coin to get around the debt ceiling. And it opens up Democrats to misleading political attacks for greenlighting unconscionable debt levels. But whether they increase the debt limit to $35 trillion or $999 trillion, this is unquestionably a proper use of the reconciliation process.

Pass the buck over to the White House (low political risk, uncertain legal risk): A more politically preferable option for Congress would likely be to create a mechanism that allows the Secretary of Treasury to continue issuing debt in excess of the statutory debt limit. For example, Congress could modify the debt limit under Section 3101(b) to be “the greater of $32,000,000,000,0000 or an amount the Secretary of Treasury determines is necessary to ensure the validity of the public debt of the United States pursuant to Section 4 of the Fourteenth Amendment[.]” (N.B.: Section 4 of the Fourteenth Amendment (“The Public Debt Clause”) reads in part: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”)

This would be politically optimal: members could say they voted for a modest debt limit increase, while creating a safety hatch for Treasury to defuse hostage-taking efforts with the debt ceiling. But like a suspension, it’s unclear if such a modification is a permissible change to the “amount” of the debt limit under the Budget Act. The Parliamentarian may narrowly read “amount” to mean exclusively a directive changing the dollars and cents inscribed in the U.S. Code. Or she could interpret this type of modification as the functional equivalent of a dollars-and-cents change.

Moreover, this type of amendment essentially amounts to a savings clause reiterating Treasury’s constitutional duty (because arguably, the debt limit itself is unconstitutional). It’s not obvious that the Senate Parliamentarian has — or ought to have — the institutional power to override an attempt by Congress to clarify the constitutional bounds of its laws.

In sum, Democrats have several different pathways they can take to attempt to disarm the incoming Republican House’s ability to play politics with the debt ceiling. These pathways have varying degrees of political and parliamentary risk. But Democrats must find one that works in order to avoid an unstable Republican majority from hurtling toward the economic breach.