The Democrats’ Debt Dilemma

 


Photo by Chris Grafton | Unsplash

Photo by Chris Grafton | Unsplash

As we head into October and lurch toward the end of the first session of the 117th Congress, the Democratic Leadership and President Biden face a terrifying trifecta of goals. If achieved, these accomplishments could pave the path toward an era of Democratic governance. But if they are thwarted – regardless of why or how – it could presage a traumatic disaster in next year’s midterm elections that will most certainly lead to the invariable soul searching and self-flagellation parties engage in when they lose landslide elections.

These goals are known by anyone who spends five minutes a day watching cable news – pass a debt limit extension that would avert a US default and a concurrent downgrading of the US economy; pass the bipartisan infrastructure legislation into law; and pass some form of Biden’s Build Back Better agenda via a party-line reconciliation bill.

As if it weren’t ambitious enough to try and enact the largest infrastructure bill in history while literally simultaneously passing sweeping health, education, childcare, and climate change reform, we are trying to accomplish this without a single vote to spare in the U.S. Senate and only three votes to spare in the U.S. House of Representatives. For Democratic leaders to pass a bill along these razor-thin margins, they must bring together the disparate factions of the party in agreement – from Rep. Pramila Jayapal and the House Progressive Caucus to Rep. Josh Gottheimer and the moderate Problem Solvers.

Recognizing this quandary, Senate Minority Leader Mitch McConnell has laid a Machiavellian trap: stating that for the first time in history, the GOP will not support a debt limit extension since the Democrats can do so on their own via reconciliation or otherwise, given their control of both the House and the Senate chambers. On Monday, McConnell doubled down on this point in a letter he penned directly to President Biden, writing, “I respectfully submit that it is time for you to engage directly with congressional Democrats on this matter.”

The cleverness of this threat is lost on most cable commentators and pundits.  If the Democrats fail to pass the debt ceiling and the nation defaults, they will absolutely shoulder much of the blame since we control all the levers of government.  But if Senator Schumer tries to pass a debt limit increase under regular order, it will assuredly fail as Senator Ted Cruz (R-TX) and others will object, and Schumer will lack the votes to invoke cloture and proceed to the vote. 

And herein lies the trap. The Democrats are left with one apparent option: pass a debt limit increase in the still unresolved reconciliation bill. 

Why is this a trap?  Because under the byzantine rules governing the reconciliation process, any legislative language to extend the debt limit would have to be modified to be a numerical increase in the limit rather than a temporal extension. Whereas in the past the two parties have always extended the limit to a time in the future, this time, the reconciliation bill would have to extend the limit by a figure – likely a number around three to five trillion dollars. 

Let that sink in.  The U.S. government spent $6.6 trillion in 2020, so simple math suggests that any meaningful extension (i.e. beyond the 2022 midterms) would need to be in the 10-15 trillion dollar range.  Assuming this occurs, every Republican candidate next year will run against Democratic opponents who either voted for or supported a party-line, partisan, vote to explode our national debt by trillions of dollars.

While this political argument has never been tested, it is not hard to see why it might be quite effective. 

Considering this dilemma, Speaker Pelosi and Leader Schumer can default and blame Republicans, but that won’t happen because Democrats govern as adults, not antagonists. However, this often means they fight in politics with one arm tied behind their back. 

So, what can they do? They can insert a debt limit numerical increase in the trillions of dollars into a reconciliation bill and let the chips fall where they may, but in my opinion, this bet is political suicide. 

Separately, they can call McConnell on his bluff and hope he comes around.  This is gaining some currency behind closed doors and could work, but it is still a roll of the dice.

Or, and this is what I believe to be the elegant solution, they can credibly assert that an extension of our debt limit is an obligation of the highest order and Mitch McConnell and the GOP are irresponsibly opposed to honoring that obligation. The only recourse, therefore, is to abolish the filibuster for the narrow purpose of extending the debt limit.

Axing the filibuster would serve multiple purposes.  It would break the seemingly intractable opposition to eliminating the filibuster by several Senate moderates who fear it will eliminate bipartisanship forever and arm the GOP with a terrible tool when they are in charge.  In my view, it would free up future congresses to deal with this issue, which may become increasingly difficult as more and more opposition to debt limit increases grows within the Republican conference.

And lastly, while not as important, it would deliver a major defeat to Mitch McConnell right before Christmas – providing some serious schadenfreude for a party still scarred by the Trump era and McConnell’s nihilistic political maneuvers.




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Al Mottur

Al is a Democratic Strategist and a partner at the law firm Brownstein Hyatt Farber Schreck


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