- Debt Ceiling Déjà Vu
- October 1, 2015
- Law Firm: McDonald Hopkins LLC - Cleveland Office
- There was a time when Congress routinely raised the debt ceiling - and did so without batting an eyelash. Those days are long gone. Instead of being a bipartisan pro forma function of Congress, raising the debt ceiling has become one of the most partisan and divisive fights in Washington. And it appears we are on a collision course for another bruising battle over it.
What’s interesting about the debt ceiling fight is that the battle isn’t just over whether or not to raise it, but also over how to avoid default in the event Congress doesn’t succeed in raising it.
House Republicans have revived a plan to allow the Treasury department to prioritize debt service payments in the event the ceiling isn’t increased - something they voted to do on a party line in 2013.
Democrats claim this is basically default by another name, while Republicans say the effort is aimed at preventing a catastrophic default.
Republicans and Democrats on the House Ways and Means Committee both noted a sense of déjà vu as GOP members revived an idea to prioritize debt service payments in the event the debt limit isn’t extended when it runs out this fall or winter. House Republicans passed a bill doing just that in the run-up to the 2013 debt ceiling fight without getting a single Democratic vote.
And on a party-line vote today, the committee approved a copy-cat bill that would give the Treasury the ability to borrow money to service bondholder debt and Social Security trust fund payments without raising the debt ceiling. Both parties dusted off old talking points: Republicans argued that the bill would prevent default, while Democrats alternately dismissed the idea as “default by another name” and railed against placing foreign bondholders over American citizens.
Over the summer, it was reported that higher than expected tax receipts would likely push off the debt ceiling deadline until December; meaning Congress does have more time than they expected they would have to get a deal done - but will they?
Conservatives still strongly oppose any effort to raise the debt ceiling and the specter of a debt ceiling fight in December - in the middle of a Republican presidential primary campaign - certainly increases the likelihood that the issue will become a proverbial “hill to die on” for many on the right.