On Wednesday, Rob Portman of Ohio joined 43 other Republican senators in a letter to President Obama defending the role of Congress in establishing federal debt limits. They want no part of the president’s proposal allowing the White House to increase the debt ceiling, Congress left with the power to overturn the move by a two-thirds majority. The senators argue that during the past three decades, the debt-ceiling question has been linked to progress in deficit-reduction.
What the letter did not mention is the fiasco of last year, Republicans holding the economy hostage to their demands for reduced federal spending. The country saw its stellar credit-rating downgraded, an estimated 1 million jobs lost and borrowing costs increased by $1.3 billion for the year, or $18.9 billion for the decade. What the president wants is a path to avoid such a wreck.
And with good reason, apparently. News reports have indicated that Republicans are exploring a fallback position in the “fiscal cliff” negotiations. They would join the president in extending immediately the Bush tax cuts for the middle class. They then would postpone further discussions until, as one House Republican put it, they arrive at “better ground,” or the leverage in February, roughly, when the country likely will need again to raise the debt ceiling, currently at $16.4 trillion.
What Portman and colleagues also skipped past is that those earlier budget discussions with the debt limit playing a role did not feature the histrionics of a year ago, global markets on edge, wondering whether the United States would default.
In response to hints of Republicans renewing their debt-ceiling gambit, the president rightly told the Business Roundtable: “That is a bad strategy for America, it’s a bad strategy for your businesses, and it is not a game I will play.” That amounts to appropriate fair warning. The president noted the concerns often voiced about uncertainty harming the economy. In that way, the prospect of playing chicken with the debt ceiling hardly bodes well.
More, the president has good company. Mark Zandi of Moody’s Analytics, an economist who has advised Democrats and Republicans, argues the debt limit has outlived its usefulness, especially with its potential to upset the economy. Others have suggested raising the debt ceiling high enough to push the next episode far down the road, past 2014 and beyond.
Worth emphasizing is the debt ceiling must be increased to cover money Congress already has spent. In other words, the action facilitates paying the bills, which the country must and will do. That spending stems from the ample powers of the purse lawmakers have, the debt limit something less than indispensable, and now an increasingly dangerous partisan tool.