Debt Debate Is Holding Uncle Sam Hostage

Published Oct 13, 2013. By Dave Helling.

Again this past week, America stood hostage to a disaster of its own making.

First, the government shut many of its own doors — no spending agreement, no consensus on health care, no path to compromise. At week’s end, the locks remained in place.

Then another threat joined the shutdown crisis: a potentially calamitous default on the $16.7 trillion national debt, which was running out of room to grow.

As Americans watched, often with a mixture of anger and resignation, the nation’s politicians once again scurried between meetings searching in vain for a common place to stand.

Then they elbowed their way onto cable TV talk shows to denounce the other side.

“This isn’t some damn game,” House Speaker John Boehner angrily insisted.

That seemed precisely wrong — it was nothing but a contest, far more about political winners and losers than actually solving problems.

“Both sides have played games with the debt limit,” said Robert Bixby of the Concord Coalition, a nonpartisan deficit watchdog group. “It’s almost irresistible.”

Norm Ornstein, a political scientist at the American Enterprise Institute, has called debt limit votes “rank and regular hypocrisy … a kind of a game.”

Taking turns

The best evidence? Views on raising the debt limit routinely toggle, based not on substance but on who holds power:

• Congress has voted to increase the nation’s borrowing limit 10 times since 2001 either as stand-alone bills or as part of broader budget packages. In that time, every member of Congress from the Kansas City area — every Republican, every Democrat — has voted for bills raising the nation’s debt limit.

They have all also voted against raising the debt limit.

What seems to drive the switch? In general, members in the majority voted yes, the minority voted no.

• Barack Obama denounced more borrowing authority and voted against a higher borrowing ceiling, calling added debt a “leadership failure.” He was a senator then, and a Republican was in the White House.

Now that he’s president, he demands an increase.

• In 2002, the Republican-dominated House supported a debt ceiling increase — under a Republican president.

“If you owe debts, pay debts,” said Rep. Mike Pence, an Indiana Republican, in the debate. “We must raise the statutory debt limit.”

It passed by a single vote.

Like her colleagues, Sen. Claire McCaskill, a Missouri Democrat, has voted for and against debt limit increases. Today she says her no votes were largely political, only meant to send a message.

“I honestly don’t think that any of us who have voted both ways, whether it’s the president or me … honestly considered actually defaulting on the debt,” she said. “When you know there’s a vote where you can send a message, that’s not going to impact overall, it’s something we do on a lot of different votes.”

Rep. Sam Graves, a Missouri Republican, also takes a situational look at debt votes.

He opposed a debt increase in 2010 but voted for the debt ceiling extension in 2011 that led to the sequester spending cuts now in effect.

He has voted for higher debt under a Republican president and has opposed it with a Democrat in the White House.

“You have obviously different compromises in different pieces of legislation,” he said.

To date, though, Obama and congressional Democrats have resisted any debt ceiling compromises, demanding a “clean” debt bill without additional budget restrictions.

“I know the American people are tired of it,” the president said last week. “Lord knows I’m tired of it. But at some point we’ve got to kind of break these habits.”

But most congressional Republicans — and some academics — say his request flies in the face of the debt limit law, which they consider a legitimate tool for extracting political concessions and spending discipline.

In an influential study in 2005, St. John’s University law professor Anita Krishnakumar argued that tight debt limits force Congress to make difficult, sometimes unpopular choices.

“Publicly visible votes to increase the debt limit have proved one of the few effective (ways) for shaming Congress and for inspiring serious reforms and summits focused on debt reduction,” she wrote.

Democrats have often suggested and agreed to debt limit extenders that contain other legislation. For years, in fact, debt limit increases were simply embedded in routine spending and budget bills.

Not the first time

The modern requirement for debt ceiling increases began in 1917.

But critics say linking the debt with politics is now enormously risky. Argue over spending, taxes, Obamacare, anything and everything else, they say, but don’t risk the nation’s credit to do it.

“Anybody who seriously believes we should default on the national debt … that’s crazy. That’s nuts,” said former congressman Jim Slattery of Kansas, a Democrat.

Ornstein says the debt limit game is now more serious because default is considered an actual possibility.

“The idea of threatening default in a real way — demanding outlandish concessions with a loaded gun to the country’s head — only emerged in 2011,” he wrote last week. “This year the hostage drama is more frightening.”

That hasn’t stopped a committed band of GOP conservatives from suggesting default wouldn’t be that bad.

One House member said last week that failure to raise the debt limit could stabilize financial markets.

Some have also argued the Treasury Department can prioritize payments, making debt payments before other checks go out.

That, they say, would prevent a default.

“There’s enough money coming into the Treasury to pay interest and to roll over principal,” said Rep. Justin Amash, a Michigan Republican.

The White House says that it lacks the authority to prioritize spending and that even if it existed, the government should not be forced to choose between bondholders and Social Security payments.

But the chorus of conservatives endorsing a possible default reflects the ongoing political advantage some see in criticizing votes to hike the debt limit.

When he announced his GOP Senate candidacy last week, tea party activist Milton Wolf repeatedly criticized Sen. Pat Roberts, a Kansas Republican, for supporting debt ceiling increases.

“Sen. Pat Roberts buckled under the pressure and sided with Washington instead of Kansas,” Wolf said.

Roberts has voted for and against debt increases. But facing the pressure from his political right, he went to the Senate floor last week to suggest default is avoidable.

“These claims of inevitable default are false, given the operation of the government and the cash flowing into the Treasury each month,” Roberts said.

“What we are asking for and what we must do is very simple: Consider a debt limit extension and budget changes at the same time.”

Reverse the vote

Some outside groups have suggested doing away with debt limits altogether. The focus should be on spending and taxes, they say, not payments for spending already on the books.

The Obama administration has argued for automatic debt increases that Congress could stop but that it would not be required to approve beforehand.

In the current climate, such an approach seems highly unlikely. Not only is the government wrestling with debt, it’s arguing about the ongoing shutdown caused by the lack of required spending bills.

That dispute will probably continue with or without a default. That means the political rhetoric will stay aggressive.

“You hear the president say if we do this, he’ll come back and discuss (spending cuts),” Graves said. “But he never does. And so you get burned. And after you get burned a couple of times, you quit listening.”

McCaskill, now that she wants to raise the limit, no longer sees debt ceiling votes as a responsible way to make a point.

“These folks are actually contemplating defaulting on the debt,” she said. “They’re pulling the pin on the grenade that could implode our economic recovery.

“There are other ways you can message.”

To reach Dave Helling, call 816-234-4656 or send email to [email protected].