Trump Says Debt Ceiling Is 'Not Necessary.' Is He Right?

Sep 9, 2017
Originally published on September 11, 2017 9:44 am

The debt ceiling's days as a recurring sticking point for politicians, and a recurring worry for government employees, could be numbered, according to President Trump.

He told reporters on Thursday that "there are a lot of good reasons" to get rid of it, and The Washington Post reported Thursday on an agreement between Trump and Senate Minority Leader Chuck Schumer, D-N.Y., to work toward that end over the next couple months.

Still, despite Trump and Schumer's "gentleman's agreement," as one Post source called it, to work to get rid of the ceiling, any plan to actually do away with the ceiling would need Republican congressional leaders, who currently oppose the idea, to get on board. Speaker of the House Paul Ryan, R-Wis., specifically has come out against eliminating the ceiling vote.

But Trump said it is not off the table.

"I think it could be discussed," Trump said. "For many years, people have been talking about getting rid of debt ceiling all together, and there are a lot of good reasons to do that. So certainly, that's something that will be discussed. We even discussed it at the meeting that we had yesterday. It complicates things, it's really not necessary."

Not necessary? The debt ceiling? Really?

Really.

The history

The ceiling, or "one of Washington's favorite manufactured crises," as NPR's Danielle Kurtzleben and Ron Elving wrote earlier this summer, was first imposed 100 years ago to appease fiscal isolationists who worried about the financial cost of entering World War I. That early debt limit, however, made no allowance for inflation or the growing population, so it has had to be raised many times (78 times since 1960 according to the Post) over the years.

Basically, the United States federal government does its budgeting differently than most countries in the world: The legislature passes spending bills that allocate where money will be spent, and then it requires a second vote to allow the country to borrow enough money to pay the debts it has approved.

Many have likened the process to declining to pay a credit card bill or agreeing to go to dinner and then arguing about whether you're going to pay the bill — after you've already eaten.

The news about Trump and the Democrats working together toward ending the debt limit process also comes on the heels of another agreement by Trump that bewildered Republican leadership in Congress: to effectively raise the debt ceiling until Dec. 8.

The House voted 316-90 on Friday to pass that bill, which included hurricane relief funds, after it overwhelmingly passed in the Senate on Thursday.

Republican leaders were hoping for a longer-term solution, so they wouldn't be forced to vote to raise the ceiling twice before 2018 midterm elections.

What could be next

If the debt ceiling were to be eliminated, it's unclear what would come in its place. According to numerous reports, Vice President Pence floated the idea of reinstating "the Gephardt rule," which does away with the need for a second vote to approve borrowing once Congress has already voted once to approve a spending that inherently necessitates borrowing. (The U.S. is projected to spend $4 trillion this year, while only bringing in about $3.3 trillion in taxes and fees.)

In 1979, Rep. Richard Gephardt, D-Mo., approached the parliamentarian about doing away with the second vote.

"I asked if there was a way that when we pass the budget [the debt ceiling] can be deemed 'raised' to accommodate the budget people are voting for," Gephardt told The Atlantic in 2011. "He said, 'Yeah, we think we can work that out.' "

And so for a period, the debt ceiling increased whenever a new budget was approved. But, as Joshua Green wrote in The Atlantic, that only silenced the issue for less than two decades:

"For a period thereafter, the adoption of the conference report on the budget resolution would trigger the Gephardt rule and 'deem to have passed' legislation raising the debt limit to accommodate the spending and revenue levels approved in the budget. Presto! Problem solved.

"It didn't last. When Republicans took back the House in 1995, they brought back the second vote as a way to pressure members on spending. 'They actually wavered back and forth,' Gephardt recalled. 'Sometimes they'd use the budget procedure to wave it through, and then other times they'd require the vote. It's silly because it's just grandstanding. David Obey used to call it posing for holy pictures. It's a facade; it's not real. If you're real, you vote for budgetary and spending decisions that would balance the budget. If that's what you want, that's what you should do. That's the operative vote. That's where the money is spent.' "

It wasn't just Republicans, either. Then-Sen. Barack Obama voted to not raise the debt ceiling in 2006 as a protest vote against President George W. Bush's leadership.

In 2011, however, the threat became real in a way it hadn't ever before, as Tea Party Republicans rolled into the House of Representatives. The GOP demanded policy concessions from the Obama White House in exchange for raising the debt ceiling, essentially threatening to send the country into default for not paying debts that were already approved.

Republicans and Democrats ended up compromising, but no one ended up very happy. Republicans felt the deal didn't do enough to curb spending habits, and Democrats deplored its reliance on spending cuts instead of tax policy.

"No one got what they wanted, and I always find that — even going back to the days that I practiced law — if people walk out of the room and parties are all dissatisfied, that's a pretty good settlement," then-Senate Majority Leader Harry Reid, D-Nev., told NPR's All Things Considered at the time. "And that's what we had here. No one was happy with it. But it was the right thing for the American people."

Public perception

Even Trump himself once supported not raising the ceiling, tweeting in 2013, "I cannot believe the Republicans are extending the debt ceiling—I am a Republican & I am embarrassed!"

The public has generally been behind the concept of not raising the debt ceiling as well.

A Politico/Morning Consult poll from this June found 57 percent of registered voters opposed to Congress raising the ceiling.

Even though voters don't like the idea of a government default, they also don't like the idea of a government with no limits.

Polls from 2011 and 2013 show similar results, though the story may change once a real threat looms. Economists are in agreement that not raising the ceiling, and thus defaulting on the debt, would lead to a global financial catastrophe.

In 2013, with a deadline looming just two weeks away at the time, a CNN poll showed a majority of Americans, instead, favored raising the debt limit.

Now it looks like Trump and the Democratic leaders are searching for a much longer solution to what has become a perennial, albeit avoidable, political headache.

The president said Thursday that his temporary agreement to raise the ceiling through December would be a sign of bipartisan things to come.

"I think we will have a different relationship than you've been watching over the last number of years," Trump said. "I hope so. I think that's a great thing for our country, and I think that's what the people of the United States want to see. They want to see some dialogue, they want to see coming together — to an extent, at least."

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