Debt ceiling looms over Republican agenda, revealing 'almost theological' fissures
Originally published June 8, 2017 at 5:10 pm Updated June 8, 2017 at 5:27 pm
With Republicans in control of both houses of Congress and the Oval Office, some thought the debt ceiling would be an easy lift.
ALAN RAPPEPORT
This summer was supposed to be a heady time for Republicans, who would be repealing and replacing the Affordable Care Act, cutting taxes and simplifying the tax code, and reining in the reach of government.
But now the party, rife with divisions, faces a familiar fight of its own making: raising the government's statutory borrowing limit.
Once a distasteful but manageable task for Congress, the debt ceiling has become a battle lawmakers seem unable to escape.
By law, Congress must periodically raise the cap on the amount of money that the federal government can borrow on international lending markets. Republicans transformed the once-routine task of lifting the debt ceiling into high-stakes games of chicken during the Obama presidency, edging the economy toward fiscal cliffs to extract policy concessions such as budget cuts and spending caps.
Instead, it has become an obstacle threatening to further stall an agenda that has fallen well behind schedule. The Treasury Department wants the debt ceiling raised before Congress leaves for its August recess, a demand that could consume many of the 13 legislative days on the calendar next month.
"It's going to complicate the ability to pass a budget, and it's going to complicate tax reform because of the internal tensions that they have to struggle with," said Ed Lorenzen, senior adviser for the Committee for a Responsible Federal Budget, a bipartisan group.
Time is running short. Republicans must finish their health-care legislation under the Senate's budget process in the coming weeks and pass a 2018 budget resolution before they can move on to the tax legislation that they have promised to approve this year. This fall, they will have to cut a deal with Democrats to fund the government. And all of that must happen against the backdrop of investigations into Russia's meddling in the presidential election.
Technically, the U.S. hit its debt limit in March — a whopping $19.9 trillion — but the Treasury Department started using accounting maneuvers to buy Congress several months to raise it to avoid a potential federal government default.
Fears about a debt-ceiling fight were fanned in late May when Mick Mulvaney, the White House budget director, noted that tax receipts were coming in more slowly than had been anticipated and that the limit needed to be raised this summer rather than in the fall. The Congressional Budget Office revealed why in its monthly budget review on Wednesday: tax receipts were $60 billion to $70 billion short of what was projected at the beginning of the year. This was most likely the result of taxpayers' delaying their tax filings in anticipation of big tax cuts.
The accelerated timetable to raise the debt limit has laid bare a difference of opinion within the White House about how it should be raised: whether it should be lifted without policy encumbrances or it should be tied to other policy changes.
Mulvaney, who led the debt-ceiling brinkmanship in his previous job as a Republican representative from South Carolina, said last week that he would like to see concessions such as spending cuts or budget-process changes tied to any bill that would raise the debt ceiling. But Steven Mnuchin, the Treasury secretary, has urged Congress to raise the borrowing limit as quickly as possible, with no strings attached, to avoid roiling financial markets and putting the economy at risk.
While the administration has not taken an official stance, President Donald Trump signaled in a meeting with the Republican leadership this week that Mnuchin, not Mulvaney, was leading debt-ceiling negotiations.
Those negotiations will not be easy. After years of arguing that debt-limit increases should be paired with spending cuts, conservative Republicans may be unwilling to raise the ceiling without a price. Many House Republicans insist inaction on the debt ceiling would not result in a government default, as Treasury secretaries from both parties have consistently warned.
After Mnuchin warned in May that time to raise the cap was running short, the House Freedom Caucus panned his request, saying, "We demand that any increase of the debt ceiling be paired with policy that addresses Washington's unsustainable spending by cutting where necessary, capping where able and working to balance in the near future."
Steve Bell, a former Republican staff director of the Senate Budget Committee, said the party's difficulties raising the debt limit were emblematic of its current state of dysfunction.
"This is the reality of the Balkanization of the Republican Party," said Bell, now with the Bipartisan Policy Center. "It is almost theological, and this is not something that is going to cement the party back together."
The infighting means Republicans will need support from across the aisle to raise the debt limit, but Democratic leaders do not appear eager to help. The party out of power in the White House has, by tradition, been reluctant to shoulder that political burden.
"I don't have any intention of supporting lifting the debt ceiling to enable the Republicans to give another tax break to the wealthy in our country," Rep. Nancy Pelosi, the House minority leader, said last week.
Democrats, including Pelosi and Reps. Nita Lowey of New York and John Yarmuth of Kentucky, the ranking members on the Appropriations and Budget committees, on Wednesday assailed Republicans for failing to get their fiscal priorities in order, particularly their inability to produce a budget or consider spending bills. They warned that the Republican Congress was "dithering toward disaster."
Similar concerns have been expressed in the Senate, where 60 votes are needed to pass debt-ceiling legislation unless Republicans try a parliamentary tactic called budget reconciliation that requires only a simple majority.
"It's going to be a lot harder to get the debt ceiling raised if our Republican colleagues insist on raising the deficit dramatically by huge tax cuts for the wealthiest of Americans," Sen. Chuck Schumer, the Democratic leader, said Tuesday.
For veterans of the borrowing limit battles of the Obama years, small policy concessions are not worth risking economic calamity.
"It shouldn't be an issue regardless of who is in the White House and regardless of who controls the Congress," said Alan Krueger, former chairman of President Barack Obama's Council of Economic Advisers. "The responsible thing is for Congress to raise the debt ceiling."
Material from the Los Angeles Times is included in this report.