Bipartisan duo offers way out of debt limit stalemate
Proposal links expedited suspension of the statutory debt limit with plan to shrink overall government debt
Two House lawmakers unveiled legislation Friday they hope can help Congress begin to tackle the rising national debt and get out of a major fiscal jam at the same time.
Scott Peters, D-Calif., and Jodey C. Arrington, R-Texas, are resurrecting a proposal they first wrote last year that would allow for expedited suspension of the statutory debt limit if accompanied by a plan to shrink what the government owes to creditors.
They said the measure would avoid recurring fights over the debt limit, a tough vote for most lawmakers. But it would not prevent Congress from suspending or raising the debt limit in the same way it has in the past.
The plan comes at a time when House and Senate Democratic leaders are preparing to grapple with raising the debt limit before the end of the year — though it is unclear what form this will take. Something needs to give soon, however, as the Treasury Department warns it may not have enough cash or borrowing room to pay all the nation's bills on time beyond Dec. 15.
The Bipartisan Policy Center, which has been offering periodic estimates of when the Treasury will run out of money, endorsed the Peters-Arrington measure.
If the legislation could gain support from Republicans and Democrats in both chambers, it could potentially be attached to a debt limit suspension or increase to make one of the most typically distasteful votes more palatable.
In its latest estimate, BPC narrowed its projection for when the debt limit would need to be raised or risk a fiscal crisis. The think tank says what it calls the "x date" will most likely occur between Dec. 21 and Jan. 28. That's a little later than Treasury's projection, though administration officials say there's a decent chance they could at least make it through Dec. 15 unscathed. But pretty soon after that conditions could deteriorate.
Congress raised the debt ceiling by $480 billion in October, bringing the total limit to $28.9 trillion. That measure was designed to last until at least Dec. 3, after which another increase or suspension would be required to avoid the risk of defaulting on financial obligations.
Then the new infrastructure law required a $118 billion cash infusion into the Highway Trust Fund, which Treasury said would be completed by Dec. 15; that will significantly reduce U.S. fiscal headroom.
Shai Akabas, BPC director of economic policy, said in a statement Congress will be “flirting with financial disaster if it leaves for the holiday recess without addressing the debt limit.”
New debt limit process
The process has similarities to a current House rule under which a yearlong debt limit suspension bill is generated when the House adopts its own budget resolution. But under the current rule, the debt limit suspension goes to the Senate where it needs 60 votes to pass before it goes to the president.
Under the new proposal, if Congress had not adopted a budget resolution by the statutory deadline of April 15, the president would have the authority to suspend the debt limit by himself. But lawmakers could reject the suspension by passing a resolution of disapproval within 30 days. That resolution could be vetoed by the president, with two-thirds needed to override the veto.
However, in order for the president to suspend the debt limit, he would be required to send a separate accompanying debt reduction plan to Congress. The Budget Committees would take up the proposal and write their own legislation — reducing the debt to GDP ratio by 5 percentage points — or if they did not, the president’s proposal and any alternative bipartisan proposals would be automatically discharged from committee.
It would take 60 votes in the Senate to proceed to the proposals, as it does with most legislation.
Congress and the White House would not actually be required to enact any deficit cuts under the bill. But in interviews last year, Peters and Arrington said their proposal would focus congressional attention on the debt.
“This is a call for us to keep in mind our future budget concerns and to start to bring the issue into this discussion so that when we get our feet on the ground again in terms of the economy, we can act to make sure that we are able to respond to the next crisis,” Peters said last year.
Arrington said the process would force Congress to address the debt without requiring a “predetermined set of policy outcomes.”