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The Country Is Safe From Economic Catastrophe—for Now

Congress voted to raise the debt ceiling on Tuesday, but the dysfunction that drives this perennial crisis remains intact.

 Senate Majority Leader Chuck Schumer speaks to reporters outside the Senate Chambers of the Capitol.
Anna Moneymaker/Getty Images

America has just completed another round of everyone’s favorite game: Will the country avoid defaulting on its debts, narrowly escaping economic catastrophe that would have global ramifications? The answer, for now, is yes: The Senate voted Tuesday afternoon to raise the country’s borrowing cap by $2.5 trillion; the House followed suit not long after midnight on Wednesday. And so another one of Congress’s self-made crises has been averted.

Senate Majority Leader Chuck Schumer pledged on Tuesday morning that the legislation would raise the debt limit to ​​“a level commensurate with funding necessary to get into 2023.” (Raising the limit to a number that will last through 2023 ensures that it will not become another albatross to hang around Democrats’ necks ahead of the midterm elections next year.) “No brinkmanship, no default on the debt, no risk of another recession: Responsible governing has won on this exceedingly important issue. The American people can breathe easy and rest assured there will not be a default,” Schumer said.

“Responsible governing” may be a bit of a stretch. Congress tiptoed to the edge of the ominously titled “X Date,” the day on which the country would default on its debts. Treasury Secretary Janet Yellen warned last month that the X Date could come as early as December 15, while the Bipartisan Policy Center estimated that it would likely occur between December 22 and January 28. By raising the debt limit just days before the X Date might occur, Congress is ensuring that the economy does not plunge into recession, but the manner by which it arrived at this result is not exactly a paragon of functional governance.

“We’re continuously finding new metrics for dysfunction in a process that was already troubled,” said Laura Blessing, a senior fellow at the Government Affairs Institute at Georgetown University.

Explaining the minutiae of raising the debt ceiling is like describing the plot to Dune—extremely difficult and almost certain to confuse the uninitiated—but I shall try to sum this up in just a few paragraphs. Congressional Republicans have said that they don’t want to be involved with raising or suspending the debt limit; that is, allowing the country to continue borrowing until it hits the ceiling on a specified date. Republicans tried to force Democrats to raise it by a number value, a more politically difficult vote, through the complicated process of reconciliation. But since Democrats were already trying to push their massive economic package, the Build Back Better Act, through reconciliation, they didn’t want to subject the debt ceiling to the same arduous procedure.

Republicans blinked in October and agreed to a stopgap measure to raise the debt limit by $480 billion. In theory, Republicans could have just agreed not to filibuster a measure raising the debt ceiling, but they did not want to be seen as helping to increase the borrowing cap in any way. (Brief parenthetical filibuster explanation: Most legislation requires 60 votes to advance; Democrats only have 50 seats, meaning that they need help from at least 10 Republicans; the reconciliation process allows legislation to advance with a simple majority. In 2006, Republicans raised the debt ceiling without any Democratic votes—but Democrats in the Senate agreed not to filibuster the measure.)

So last week, Congress approved a measure allowing a bill raising the debt ceiling to advance with a simple majority. Enough Republicans supported the bill creating the expedited process for it to pass. Functionally, several Republicans agreed to a measure to break their own filibuster. Democrats are happy that they don’t have to use the reconciliation process to raise the limit. “This is still a cumbersome process, but it’s much better than reconciliation,” Senator Chris Murphy told The New Republic on Tuesday.

Republicans are also claiming victory because Democrats agreed to raise the debt ceiling by a numerical value instead of just suspending it, which they say forces Democrats to go on the record about how much they are willing to spend. The increase to the debt limit will cover the Build Back Better Act, if it passes, but it will also cover all government spending. (The limit is currently set at $28.9 trillion and covers debt incurred by both parties.)

“They found a procedural solution for a messaging problem,” Blessing said. “The continued willingness to run with scissors does not bode well for the future here.”

The can has just been kicked further down the road. What happens in 2023, when Republicans have a very good chance of retaking one or both houses of Congress? They were unwilling to vote to raise the debt ceiling this year, going so far as to create a specific one-time carve-out in the filibuster to make it seem as if they weren’t at all involved in raising the limit, even though by voting to do so, they were allowing the hike to go forward. Would that opposition to raising the limit remain once Republicans are in power?

Senate Minority Leader Mitch McConnell fielded criticism from some in his own party for agreeing to a deal allowing Democrats to avert catastrophic default. Former President Donald Trump weighed in over the weekend, arguing that McConnell should have used the vote to try to convince Democrats to drop their agenda. Trump sneered that McConnell “didn’t have the guts to play the Debt Ceiling card, which would have given the Republicans a complete victory on virtually everything.”

The most recent showdown over the debt limit differs from some previous fights: In 2011, both parties reached a deal to marry a suspension of the debt ceiling with some ultimately unsuccessful measures aimed at addressing the growing deficit. (The Budget Control Act of 2011 established a bipartisan “supercommittee” to come up with solutions, but Democrats were unwilling to cut benefits and Republicans were unwilling to agree to tax increases.) But this year, Republicans did not press for any deficit-reducing measures during the standoff, although it did have the potentially intended side effect of distracting Democrats amid their own tortured intraparty negotiations over the Build Back Better Act.

GOP Senator John Kennedy, a conservative Republican from Louisiana, told The New Republic that if Republicans retake one or both chambers, he would push for adding budget reforms to the next debt limit increase. “One of my regrets in the McConnell-Schumer-Pelosi deal was that those of us who don’t believe we can spend ourselves into prosperity got nothing for it. Zero. Zilch. Nada,” Kennedy said.

Still, Republicans have slammed Democrats for profligate spending since they retook the majority, decrying the $1.9 trillion coronavirus relief measure passed in March and the possible passage of the Build Back Better Act. (Whether the latter measure actually passes is ultimately up to Senator Joe Manchin, a moderate Democrat from West Virginia who shares Republican concerns about spending.) Republicans are already hammering Democrats on budgetary issues, but they are not shy about enacting legislation that adds substantially to the debt—their own 2017 tax cuts, which primarily benefited higher-income individuals, added roughly $2 trillion to the deficit.

“If they jam through another reckless taxing and spending spree, this massive debt increase will just be the beginning,” McConnell said on Tuesday. (Again, increasing the debt limit is not the same thing as authorizing new spending.)

There are some efforts among members of Congress to defang the power of the debt ceiling as a political cudgel. Democratic Senator Ron Wyden on Tuesday expressed his hope to eliminate the debt ceiling altogether, telling reporters that it “defies common sense.” A bipartisan duo of representatives released a bill this month to create a recurring and structured process for suspending the debt ceiling. However, it’s unclear whether efforts to reform or eliminate the debt ceiling will be successful.

But the continued political brouhaha over the debt ceiling obscures the very real consequences of allowing the country to default on its debts, which at the very least could include recession and the inability of the Treasury Department to deliver such priorities as Social Security payments, Medicare benefits, and military salaries.

“It’s not just some boxing match where a donkey and an elephant get in the ring and you cheer for your side,” Blessing said. “It affects everyone in the stands.”