Federal debt is too high and growing at an accelerating pace. Approaching the debt limit leads to contentious debates about a lack of fiscal responsibility in Congress. It is thus no surprise that legislators seek to avoid voting for the inevitable debt limit increases that are a symptom of chronic deficit spending.
Commentators have called on lawmakers to eliminate or circumvent the debt limit. They’ve found eager supporters in the Democratic House Budget Committee of this departed Congress. Several Republicans have also voiced support for making debt limit votes less politically painful, including Senator Mitch McConnell, whose proposal to allow the President to unilaterally raise the debt limit became known as the McConnell Rule. But automatic debt limit increases threaten to put the U.S. government on the fast track to fiscal ruin.
Several attempts at avoiding legislative debt limit increases have been proposed. Three of the most prominent approaches include:
Eliminating the debt limit. David Dayen suggested in The American Prospect that Congress could raise the debt limit to “$5 quadrillion or $100 quintillion or Graham’s number….neutralizing the debt limit.” Others have argued that the Treasury could mint its own platinum coins at any denomination it chooses as a workaround to the debt limit. This idea became popularized as the trillion-dollar-coin proposal.
Automatically raising the debt limit. At the beginning of the 116th Congress, the majority democratic House adopted a standing rule akin to the “Gephardt rule” that would provide for a spin-off joint resolution to suspend the debt limit whenever the House succeeded in adopting a budget resolution. The House budget resolution would thus double as a debt limit vote, automatically sending legislation to the Senate that allowed for increases to the debt limit through the end of the budget resolution’s fiscal year.
Automatically raising the debt limit after proposed deficit reductions. A bipartisan group of 60 representatives sent a letter to House leaders in June of 2020 seeking “a process for establishing overall budgetary goals—such as debt-to-GDP targets—that would reduce debt-limit brinkmanship as long as the budget remains on a responsible path.” Since then, Reps. Scott Peters (D‑CA) and Jodey Arrington (R‑TX) introduced H.R. 6139, the Responsible Budgeting Act, which would generate spin-off legislation to increase the debt limit if Congress adopted a budget resolution that reduced debt to GDP by 5 percentage points at the end of the 10-year budget window. This is similar to the Gephardt rule, except it requires a certain fiscal goal be met by the congressional budget resolution and for it to be adopted by both chambers. There’s one more loophole: if Congress failed to adopt such a budget resolution, the President could unilaterally increase the debt limit (à la the McConnell Rule) after introducing a fiscal plan to meet the debt reduction targets. Congress would then have 30 days to vote against the debt limit increase. It’s also important to note that neither a congressional budget resolution nor a presidential deficit reduction proposal are self-executing. Congress would still need to pass separate deficit reduction legislation to enact any changes into law. A budget plan without execution won’t stop the growth in the debt.
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