Debt ceiling madness

Playing political games is not limited to one political party. Both parties indulge in it and seem to forget that the country suffers. A case in point: During the deluge of emails that presidential candidate Hillary Clinton recently released was one in which she asked her staff to find out, when she was in the U.S. Senate, how many times she had voted against raising the debt limit. One could only surmise that she wanted this information to demonstrate, if needed and when appropriate, that she, too, was a “fiscal hawk.”

{mosads}You see, all members of Congress use voting against raising the debt ceiling to prove that they are fiscally prudent and so mindful of monitoring federal governmental expenses. The fact is that since 1940, the debt limit has been increased 95 times.

According to the U.S. Constitution, Article I, Section Eight, Congress has the power to place limitations on the federal debt. During the 1920s and 1930s, Congress altered the way it could be done, so that the U.S. Treasury would have more flexibility. But in 1939, a precise general limit (a specific number) was placed on the federal debt.

The 95 debt limit increases have been done in three different ways. Seventy-six times, they have occurred under regular legislative procedures. Fifteen times, under something called the “Gephardt Rule,” and four times under reconciliation procedures. (The Gephardt Rule provided for an automatic passage of the debt limit increase when the conference report on the budget resolution was adopted. The rule has since been repealed by the U.S. House.)

The storyline seems to follow a repeated pattern. Both houses of Congress wait until the very last minute to finally raise the debt limit ceiling; everyone sighs in relief. The amount is different and its duration varies, but everyone is so grateful that the ordeal is over that they just move on and no serious thinking is done to permanently rectify the situation.

The last time this was done was a year-and-a-half ago. But that time, there were economic consequences. The delay in agreement led to a downgrade in the U.S. credit rating for the very first time. This year’s deadline is now Nov. 5. The most drastic consequence, if there is not an agreement, is far worse: a first-ever default by the U.S. government. What that would do is beyond comprehension.

Needless to say, there would be four- or five-digit drops in the U.S. and world stock markets. Most important, confidence in the U.S. economic system would evaporate and might not fully recover, ever. This is not a fantasy doomsday scenario; this is a likely scenario.

As Maya McGuiness of the Committee for A Responsible Budget reminded me, even today, the Treasury Department has taken “extraordinary measures” so that we are not technically in default right now. This madness has to stop!

I am very worried that there are enough Republican House members who aren’t the least bit interested in this issue and, in fact, some who might want to see the U.S. default. To them, making their point takes precedence over and above everything else — even the country’s economic health, stability and future well-being.

It is up to the leadership of both parties and Senate Finance Chair Orrin Hatch (R-Utah) and House Ways and Means Chair Paul Ryan (R-Wis.) to sit down and create a mechanism that does not repeat and encourage the continuation of this destructive procedure. A new sensible alternative must be approved and then implemented that has genuine bipartisan support and will forever take out the political games that members of both parties play.

In an interview, Sen. Ben Cardin (D-Md.), a member of the Senate Finance Committee, summed it up in plain English: We should permanently fix it. When asked if he feared a possible government default, he immediately said: “I don’t want to test it.”

Cardin’s solution is to continue to have Congress play the essential role. He favors a return to the Gephardt Rule; he even suggested renaming it the “Boehner Rule.” Cardin challenges the institution he is a member of to have the “courage to deal with the debt ceiling in a mature way.”

I fervently hope this comes about. The stakes are too high if it does not.

Plotkin is a political analyst, a contributor to the BBC on American politics and a columnist for The Georgetowner.