Last week, a reporter asked President Biden if he would support a repeal of the debt ceiling. “A permanent repeal of the debt ceiling? … Just say we don’t have a debt limit?” he asked with a laugh, as if the notion were fantastical. “No. That’d be irresponsible.”
The reality is in fact just the opposite. Repealing the debt ceiling, or raising it to a level at which it is practically repealed, is the responsible course of action. Leaving the debt ceiling in place invites political chaos and creates the risk of a global economic meltdown with absolutely no benefit whatsoever. Biden’s dismissive comment was the most irresponsible act of his entire presidency.
The Washington Post reports that Biden uttered this response extemporaneously, “surprising some of his own aides, according to two people who have been in communication with senior administration officials and spoke on the condition of anonymity to reflect private conversations.” In so doing, he blundered into a crisis that he has a short period of time to resolve, and if he fails, it could very well destroy his administration.
A brief refresher: The debt ceiling is not an instrument that limits the government’s ability to borrow money. The amount of debt is determined by Congress, which sets levels of taxes and spending and borrows the difference between the two. The debt ceiling is a separate vote to authorize the Treasury Department to actually pay its lenders what it owes them. Because of the dollar’s unique role underpinning world markets, a failure to repay would trigger an unpredictable and potentially catastrophic meltdown of global currency markets.
For many decades, it barely mattered that the U.S. government had an extraneous self-destruct button installed. But then the Republican Party was taken over by maniacs. The first generation of maniacs, led by Newt Gingrich, only toyed with the idea of using the debt ceiling as a threat to compel a Democratic president to adopt their proposals before settling on the less crazy (but still deeply self-destructive) mechanism of shutting down the government.
The next generation of maniacs to confront a Democratic president came around in 2011, when the tea-party Congress threatened to default on the debt to force President Obama to sign some combination of spending cuts. Obama disastrously took this as an opportunity for serious negotiations, not realizing he was simply being extorted. He gave Republicans spending cuts he believed would set the stage for real mutual compromise before wising up.
Biden somehow unlearned the lesson. Meanwhile, the current generation of Republicans has continued the party’s long descent into ever-deeper levels of madness. Its members are broadcasting their intention to use the debt ceiling as a hostage. Even the “sane” Republicans have given up on steering them away from this course of action.
“There’s a genuine desire and strategic imperative to get something out of this — that may be stupid and may be reckless, but they have to play this game out,” one party strategist tells the Post. “If you don’t try it, you’ll just get beat up on by figures on the right, including the former president — who will say you’re weak and stupid and you gave them this vulnerable thing for nothing.” If you have watched Republicans capitulate to Donald Trump’s various fantasies, this logic sounds depressingly familiar. Once the movement has started down the track of extorting Biden, simple self-interest will make it impossible for Republicans to defect.
It may be possible for Biden to escape the hostage scenario by paying a small ransom — say, some cuts to the programs he just devoted a year to passing through Congress — but even that would be extremely risky. Any negotiation invites both sides to engage in brinkmanship. Both parties to the talks have an incentive to stake out a firm line and threaten to walk away. Even if they strike a deal, the agreement could break down if the Republicans fail to deliver 218 votes, a failure that happens all the time. And even if a negotiation succeeds, it invites more hostage-taking the next time around.
It would be nice if House Republicans could be persuaded to lift the debt ceiling without being paid off with a policy concession. But they have already decided to hold it hostage. Now there is no way out other than eliminating the debt ceiling while Democrats still have the time to do so. Democrats can do this with one vote in Congress. (The backup plan — announcing the Treasury Department will mint a coin to cover the cost of its debt — is available but riskier.)
Democrats had years to devote a small amount of political capital to defusing this weapon. Simple myopia has prevented them from doing it. Now the clock is ticking down toward doomsday. Biden’s loose talk has made the task all the more difficult but also all the more necessary.