House Republicans gave up today on their effort to get something in exchange for raising the debt limit. The House passed a “clean” debt limit bill, with only 28 Republicans voting in favor. Separately the House voted to repeal the cuts to veterans’ benefits that were part of the Ryan-Murray deal; that vote was 326-90. Whether the veterans’ COLA cuts will actually be restored remains to be seen. The House bill offsets the cost of restoring the benefits by extending the sequester for another year. The Senate may or may not go for that solution. There is, in my view, a solution that should be easy: offset the cost of the COLA restorations by plugging the loophole that makes it easy for illegal aliens to defraud the government with respect to child benefits. Senators including Jeff Sessions and Kelly Ayotte have proposed this solution repeatedly, but Democrats have always voted it down. Apparently their commitment to illegal alien fraud is stronger than their commitment to our nation’s veterans. Remarkable, but true.
Most conservative activists are up in arms about the House leadership giving up on a quid pro quo for raising the debt limit. The debt limit is a frustrating issue; it seems as though Republicans ought to be able to get substantial consideration for agreeing to raise the limit, since the Democrats can’t do it without us. The problem is that the threat not to raise the ceiling isn’t credible. This has now become blindingly clear, to the point where the Democrats are happy to call the Republicans’ bluff.
Actually, not raising the debt ceiling is an option that should be on the table. The issue is always obscured by hysterical talk in the press about default. In fact, the federal government can’t and won’t default on its debt obligations. If the debt ceiling were not raised, the effect would be as though a balanced budget amendment had suddenly passed. From that point on, federal spending would be limited to federal revenues. Government debt obligations are required to be paid, and would be, but other spending would have to be cut. I am not sure whether any legal requirements would require cuts in some areas rather than others. Discretionary domestic and military spending would certainly be cut; Social Security, Medicaid and Medicare spending likely would be cut too. In the short term, the effect would be something of a train wreck, but if you are in favor of a balanced budget amendment, in principle there is no strong reason why you should be appalled at the idea of leaving the debt limit in place.
The problem is political: voters do not have the political will to accept the short-term consequences of capping federal spending. If you think a short, 17% government slowdown was a disaster for the GOP, you can hardly imagine the political consequences of a suddenly-imposed federal spending limit. The administration would, to the extent possible, cut spending that would inflict maximum damage and inconvenience on the public. So the House leadership is correct in recognizing that refusing to lift the ceiling is not a viable option at this point.
Meanwhile, the nation’s debt continues to rise inexorably, now well past the $17 trillion mark. Some have suggested repealing the debt ceiling altogether–the concept is entirely statutory–but I think the ceiling serves a purpose, if only because it provides an occasion, once a year or so, to remind voters of the catastrophic level of debt we are incurring.