The “Americans Are Not Deadbeats Act”: Republicans Have Given Democrats a Gilded Political Path to Killing the Debt Ceiling

Posted in: Tax and Economics

When Senate Minority Leader Mitch McConnell (R, Ky.) speaks, he sometimes tells the truth. He is reliably true to his word when he is making hardball moves that exploit partisan advantages. His accompanying statements justifying those moves are always highly dishonest and hypocritical, but it is safe to trust in his deep commitment to doing the most cynical and opportunistic thing possible.

Back in 2016, for example, did McConnell proceed as the Senate has always proceeded with Supreme Court nominations? He surprised everyone by saying that he would not do so, but he meant it. He invented a bunch of blathering justifications, most memorably claiming that there was some kind of “rule” that prevented justices from being confirmed during presidential election years. That was a flat-out lie, but he did what he promised to do and blocked the nomination. In 2020, he then flip-flopped and made smarmy and reality-free claims about Supreme Court nominations; but again, he carried through on his vow to make the most shamelessly political move available.

Thus, when McConnell announced last week that he had ordered his Republican colleagues to vote against any bill that will increase the debt ceiling, one would reasonably expect McConnell to make up a new load of nonsense to justify his decision, and he did. One can also be sure, however, that he will carry through on what he said he will do. Because he can.

This means that the debt ceiling is now—just as McConnell wants—entirely the Democrats’ problem. That seems like a big deal, and the press is already pumping out panicky, facile articles about how terrible a debt ceiling default would be. But this gives Democrats a great opportunity finally to make the debt ceiling a non-issue. They can even create a catchy slogan to sell their counterpunch against McConnell and the Republicans, as I will explain below.

The bottom line is this: Democrats have the power to prevent a debt ceiling crisis later this month, and they should use that power not only to forestall this crisis but to take away the power that McConnell so gleefully threatens to exploit in the future. Are you listening, Democrats?

From Bad Joke to Existential Threat to Partisan Farce: The Usual Debt Ceiling Analysis is Now Inoperative

I have already written two Verdict columns in the last five months discussing the debt ceiling (here and here). I did this because Republicans had begun to mutter about using the debt ceiling for political advantage against President Biden, even though they had no problem suspending the debt ceiling and increasing the national debt when Biden’s predecessor was in office. But again, cynicism and hypocrisy are what we can always expect from today’s Republican Party.

It has been almost eleven years since Republicans, then flush with excitement over having retaken the majority in the House of Representatives in the 2010 midterms, started to talk about using the debt ceiling for partisan advantage. At the time, a reader of my columns on Dorf on Law asked if I could write something about the issue. My fateful response was that I could not imagine being able to write more than a paragraph on the issue, because it was so silly to imagine that Republicans would actually carry through on their fevered musings. Dozens of columns, four law review articles, and one book later, here we go again.

Once it became clear that the Republicans might refuse to increase the debt ceiling during Barack Obama’s presidency, the issue was no longer a bad joke, becoming instead an existential threat to the country (and the world). Nothing good could come from an actual debt ceiling crisis, legally or economically. Even were a president to follow my advice in such an extreme situation, I would warn him that there are only bad choices, and I could only suggest the least damaging among them. It would, however, still be a very bad situation, combining an economic catastrophe with a constitutional crisis. Fun times!

Now, however, McConnell and his zombie caucus have handed Democrats the keys to the car, daring them to take a political sideswipe by doing the responsible thing and neutralizing the debt ceiling. This partisan farce, entirely of McConnell’s making, is a genuine opportunity for Biden and the Democrats.

This Is All About Republican Posturing

The Washington Post’s news article describing McConnell’s cynical announcement forbidding Republicans from “helping” Democrats to increase the debt ceiling ran under an odd headline: “Senate Republicans say they will vote to allow a debt default, leaving Democrats scrambling for plan to avert economic crisis.” That is not quite right.

As the article itself makes clear, although Senate Republicans have now vowed to vote against any increase in the debt ceiling, McConnell does not expect that there will in fact be a debt default. Indeed, he makes it very clear that he expects that Democrats will do the right thing—the thing the McConnell readily acknowledges is the only responsible course of action—and avoid any chance of default by stepping in at the last second to increase or suspend the debt ceiling.

Because McConnell knows that Democrats will do what is right—indeed, he is counting on it—he and his colleagues are not “vot[ing] to allow a debt default.” They will vote to force Democrats to take the political heat for appearing to be “in favor of debt.” Again, as The Post’s article makes abundantly clear, this is a situation in which McConnell is being quite honest about his bottom line—as honest as he was about blocking Merrick Garland’s nomination to the Supreme Court.

This is all about partisan advantage, not debt or any other matter of policy or principle. McConnell makes his usual dishonest claims along the way, such as saying that the Democrats’ not-yet-even-passed spending bills are why we need to increase the debt ceiling (a lie that the faux-moderate Senator Susan Collins has repeated), but McConnell is quite right when he says that Democrats have the votes and the responsibility to do this. He simply wants to be able to heckle and laugh—and win political points—while it is happening.

The “America Always Pays Its Bills Law”?

Because we know that McConnell will always lie while telling the truth about what he plans to do, we can ignore the lies and focus on the hard reality that Republicans will not be moved on this issue. It truly is on the Democrats now. I do not blame Democrats for responding politically by loudly calling out Republicans’ hypocrisy and cynicism—indeed, it would be political malpractice for them not to do so. Now that they can have no delusions about getting bipartisan assistance, however, what should they do?

To begin, we know that Democrats will do the right thing. They do not want to harm the economy because of a pointless law (or for any other reason), and just as importantly, they know that it would be political suicide to allow a debt ceiling crisis to happen when they control both the White House and both houses of Congress.

If Republicans want to make this a partisan game, then, how should Democrats respond? In one way or another, the Democrats’ reconciliation bill—the only kind of bill that (under the Senate’s insane rules) can be passed by a simple majority—will have to include a provision to neutralize the debt ceiling. Intraparty negotiations among Democrats around the reconciliation bill were already fraught, which is why McConnell cannot even contain his glee at adding a complicating factor into the mix.

But in fact, there is a very simple way for Democrats to neutralize the debt ceiling, now and even if they lose the majority in either house of Congress for the remainder of Biden’s time in office. Once known as the Gephardt Rule, named for the former Democratic House Speaker Richard Gephardt, the best way to neutralize the debt ceiling is simply to increase it automatically as part of every taxing and spending bill that Congress passes.

Although it would be great to repeal the debt ceiling outright, the Gephardt Rule achieves the same purpose without having to include a provision that explicitly eliminates the debt limit (and thus reduces—but of course does not eliminate—Republicans’ opportunities for demagoguery). Wherever the Democrats land on the reconciliation bill (whether they spend $3.5 trillion over ten years while increasing taxes by $2.0 trillion, as currently proposed, or any other combination), the bill should include a provision that says: “As appropriate, the Secretary of the Treasury shall compute and is authorized to adjust the borrowing limit to prevent the United States from defaulting on the obligations created under this and previous fiscal measures.”

Note that this does not require Democrats to put a number on the debt ceiling or to suspend it, forestalling another demagogic opportunity for Republicans. It also has the advantage of not being new. It simply brings back a rule that Republicans eliminated but that had worked flawlessly for years.

In the title of this column, I offered a catchy name for this idea: The “Americans Are Not Deadbeats Act.” I used the word “Act” even though it would be a sub-part of a larger law with many other provisions, but it does not matter whether Democrats call this an act, a provision, a rule, or anything else. It does matters—enormously—that they call it what it is: a way to guarantee that the debt ceiling is never again used to create an entirely phony political crisis with very real economic consequences.

Democrats could instead call it the “America Always Pays Its Bills Law,” the “Full Faith and Credit Proviso,” the “Preserving Our Children’s Credit Worthiness Rule,” or even the “Democrats Do Not Welsh on America’s Obligations Clause.” No matter what they call it, they would deliberately and clearly make it impossible for themselves to pass a fiscal measure without also making sure in advance that the necessary borrowing authority is included in the measure.

Why is this good politics? Democrats can say that they will never again allow Republicans to put the good name of the United States on the line without guaranteeing that we will be able to pay our bills when they come due. No one should ever be told: “We know we promised to pay you in full and on time, but we have to break that promise.” Democrats can and should say that America keeps its promises, and they should proudly say that only they have guaranteed that this country will stand by its word.

Note that this would also tie Republicans’ hands even if they come back into power in both houses of Congress after the 2022 midterms, because President Biden could veto any attempt to repeal the law. And why would he agree to give back to Republicans a hostage-taking device that they have not been shy about using against Democrats?

What will happen when, as I have explained (again and again) here on Verdict, Republicans’ anti-democracy measures turn the United States into a one-party autocracy, most likely with Donald Trump as their leader-for-life? Nothing. They only care about the debt ceiling when there is partisan advantage to be had, so once they have locked down the political system, they will do whatever they want with taxes, spending, and debt.

In the meantime, however, Democrats have been given a golden opportunity not only to deal with the debt ceiling now but for as long as this country continues to resemble a functioning democracy. Not only is the Americans Are Not Deadbeats Act good policy, but it is also good politics. Mitch McConnell and his cohorts will respond by baying and whining about “uncontrolled debt” and “spending money like drunken sailors,” but they will do that no matter what.

Finally, it is worth noting that nothing here requires us to return to the underlying legal and constitutional questions (questions that have taken up so much of my time over the past decade) about what the president must do if the debt ceiling is not increased. The Democrats know what they must do, and because they will rise to the occasion, they might as well thank Mitch McConnell for handing them the ability to end debt ceiling dramas once and for all.

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