WASHINGTON — Congress first created a debt ceiling at the height of World War I as a way to borrow money without having to approve each and every bond issue.
Now, some are wondering whether the debt limit — in its current form — has become more trouble than it's worth. Almost 97 years since its inception, the debt limit has grown from $15 billion to $17 trillion. And the perennial battles over increasing that limit have led to Congress to come within days or even hours of defaulting on the nation's debts.
"I think the debt limit is a crock, basically," said Rudy Penner, a former congressional budget director. Speaking to the Bipartisan Policy Center on Monday, he said the debt limit once helped produce budget reforms like the Gramm-Rudman-Hollings balanced budget deal of 1985.
But that won't work in a more partisan age. "They always say that in order to be effective in negotiations, you have to be willing to shoot the hostages. We've never been willing to do that over the past 100 years," Penner said.
As Congress faces another deadline at the end of this week to increase the debt limit yet again — or risk running out of borrowed money by the end of the month— there are renewed calls to revise or even abolish the debt limit entirely. Among the proposals:
• The McConnell Rule: As part of the Budget Control Act of 2011, Sen. Mitch McConnell, R-Ky., proposed a mechanism that would allow the president to increase the debt limit in stages, but give Congress the option of voting down an increase through a resolution of disapproval. Penner said the president could always veto such a resolution, requiring a two-thirds vote in order to prevent an increase.
Treasury Secretary Jacob Lew suggested Monday that could work. "I think that Congress has come up with a mechanism, and they've used it a couple times already now, where they've left it to the president to extend the borrowing authority, they've been able to vote against it," he told National Public Radio.
But McConnell doesn't support making the rule that bears his name permanent. It came about as a compromise that included $2 billion in spending cuts — something President Obama says he won't negotiate this time, said McConnell spokesman Don Stewart. "Also, it was for a defined period set by an act of Congress — not the whim of a president," he said.
Still, the McConnell rule has inspired Democrats to propose similar schemes to raise the debt limit in the future. Rep. Michael Honda, D-Calif., would allow the president to increase the debt limit each year by an amount needed to meet spending obligations. Congress could vote down an increase within 50 days. "Congress wants that power to say yea or nay, and this affords that," Honda said. "I heard Sen. McConnell mention that a couple years ago, and thought, 'That really does make some sense.'"
• The Gephardt Rule: In effect from 1979 to 2001, the rule — named for former House Democratic leader Richard Gephardt, D-Mo., — used legislative sleight-of-hand to insert a debt limit increase into the annual budget bill after it already passed, effectively establishing a new debt ceiling at whatever level needed to spend what was in the budget.
Rep. Darrell Issa, R-Calif., has proposed a similar scheme that would tie the debt limit to the budget. But unlike the Gephardt Rule, which avoided a standalone vote on the budget, the Issa rule would require a separate up-or-down vote under an expedited process.
• The 14th Amendment Solution: In 2011, some liberal groups urged President Obama to simply disregard the debt limit, citing Section 4 of the 14th Amendment: "The validity of the public debt of the United States, authorized by law ... shall not be questioned." Obama rebuffed those calls, saying White House lawyers were "not persuaded that that is a winning argument."
Obama also dismissed an idea from some liberal scholars to order the U.S. Mint to issue a $1 trillion coin, to be deposited in the Federal Reserve as a way to simply make more money.
• Prioritization: Congressional Republicans have offered several proposals that they say would blunt the effect of default by requiring the Treasury to pay some bills — like debt payments and Social Security benefits — before others. One such proposal by Rep. Pete Sessions, R-Texas, passed the House last year but died in the Senate. Lew has said such schemes are unworkable and would represent "default by another name."
• Constitutional amendments: Rep. Randy Neugebauer, R-Texas, wants a constitutional amendment requiring a two-thirds vote to raise the debt limit. Rep. David Schweikert, R-Ariz., wants two-thirds of Congress and a vote of a majority of state legislators to raise the debt. Rep. Rick Crawford, R-Ark., wants to tie an increase in the debt limit to a resolution submitting a balanced budget amendment to the states.
There's no question that Congress needs to raise the debt limit as soon as possible, said Robert Bixby of the Concord Coalition, a debt watchdog. But he said Congress should also consider a more permanent fix.
"Why not attach a debt limit reform commission, or some kind of process that would look at all these issues?" he said. He would constrain the growth in the debt limit to the growth rate of the underlying economy. "Having some kind of restraint is a good idea, essential really in this entitlement-driven budget," he said