Photo-Illustration: Intelligencer; Photo: Anna Moneymaker/Getty Images
the national interest

Imagine Negotiating a Debt-Ceiling Ransom With These Maniacs

Time to start minting the coin.

Photo-Illustration: Intelligencer; Photo: Anna Moneymaker/Getty Images

The right-wing rebels contesting the vote for Speaker of the House have floated a wide array of complaints against the Republican Party’s leadership — ranging from the budget deals to “cultural Marxism.” But there is one point of action in particular looming ominously on the horizon of their fevered imaginations: the federal debt ceiling. Representative Ralph Norman, one of the holdouts, told reporters that his demands of the new Speaker include a willingness to hold the full faith and credit of the government hostage to as-yet-unspecified demands. “Is he willing to shut the government down rather than raise the debt ceiling?” Norman warned. “That’s a non-negotiable item.”

While Norman appears to believe that shutting down the government and refusing to lift the debt ceiling are the same thing, they are, in fact, different and unrelated. Shutting down the government happens when Congress fails to authorize funding to keep it open. The debt ceiling is a weird quirk of U.S. law that requires Congress to hold a separate vote to authorize paying its debts after it has already incurred the debt. If Congress votes to spend more money than it raises, then refuses to pay the people who lent it the money to make up the difference, it would devalue the dollar as a global currency and possibly trigger a global financial crisis.

This vote was something of a formality, occasionally used as a prod to get Congress to pass other mutually agreeable provisions, until the Obama administration, when Republicans decided to begin using the debt ceiling as a hostage, threatening to start a crisis unless Obama accepted spending cuts. Obama disastrously misidentified these threats as an invitation to a negotiation (which he desperately wanted), only realizing too late that he was actually being extorted.

Republicans view this episode as a success and their best model for enacting spending cuts. The Republican fiscal agenda is deeply unpopular, and rather than try to enact it when they win power (the method most parties use to enact their agendas), Republicans now see Democratic administrations as the best time to advance it. The strategy is that they can force Democrats to accept unpopular spending cuts, thereby relieving Republicans of the backlash.

And while the most unhinged members of the Republican caucus have the most grandiose designs for using the debt ceiling as extortion, even the least-insane Republicans believe this method should be a routine tool to enact their agenda. The party’s mainstream position, expressed in arguments like this and this, argues that Republicans should use the debt ceiling as extortion. The stance differs from the radical one in degree, not kind — mainstream Republicans want their party to confine itself to attainable demands.

Now whether the debt ceiling should be used as an extortion device is a normative question. Republicans obviously have rational reasons to believe that it should be: It’s a tool that’s useful for parties that have unpopular economic policies to push and a credible reputation for being crazy — two conditions that apply to Republicans but not to Democrats.

Putting aside the question of whether it’s right or wrong, there is a second one of whether the mainstream Republican plan of a small, “reasonable” debt-ceiling extortion is even possible. The events of this week strongly suggest that it is not.

Even under the best of circumstances, these negotiations are inherently fraught. There’s no obvious way for either party to determine just how many schoolchildren should be denied lunches or single mothers stripped of their health insurance in return for the privilege of postponing a self-induced financial crisis. Both parties have a natural incentive to engage in brinkmanship, pushing the negotiations to the last moment. When the parties are negotiating matters like the federal budget, the deadline slips routinely. But a short-lived government shutdown has limited damage. Even a very brief debt-ceiling breach would likely have permanent costs.

In the current circumstances, a successful hostage release would be all but impossible. Imagine a Republican Speaker — any Republican Speaker — figuring out a ransom that almost the entire caucus could agree on. The intraparty dynamics virtually guarantee that anything a Republican leader could agree to would immediately be seen on the far right as too little.

All is to say that even if you think Biden ought to negotiate a debt-ceiling-ransom demand, it’s now a practical impossibility. The only way to accomplish the goal is to separate it from policy altogether. The best way to do that would have been for Democrats to lift the debt ceiling when they still had control of Congress. (Their failure to do so could potentially prove to be the decisively catastrophic choice of the last four years.) The best remaining option is for the Treasury to use its Congressionally inscribed authority to mint coins in denominations it chooses.

(Republicans would meet such a move with a lawsuit, and they can normally count on sympathetic jurists to stretch legal interpretation as far as it can go to achieve party-wide ends. But it seems doubtful that even a Republican-controlled Supreme Court would issue a ruling that would precipitate an immediate economic catastrophe.)

All this may sound implausible and difficult to imagine. But picture trying to sell a bipartisan negotiation to a member of Congress who thinks breaching the debt ceiling and keeping the government open are the same thing or that forest fires were caused by the Rothschilds via a secret space laser.

Imagine Negotiating a Debt-Ceiling Ransom With These Maniacs