steverafferty.com

Last night, at the brink of economic catastrophe, the Congress passed measures to raise the “debt ceiling” and reopen the federal government.  The prevailing wisdom was that, eventually, the Republicans would be rational and do what was necessary.  I have to admit that part of me worried that the members preventing these funding measures had a perverse curiousity;  that they might let the economy roll over the cliff to see what would happen.  Fortunately, my worries (this time) were unfounded.

One of the things that contribute to the problem is the irresponsibility of the main stream press.  Some think that the media is liberal, some insist it’s conservative, others believe it’s biased toward corporate interests.  The last is most accurate in that most media outlets are owned by large corporations.  However, the truth is a little more nuanced.  The news media are biased toward their own interests.  Controversy sells newspapers; it also entertains television viewers.  A responsible news media would provide information; an informed public would provide a counterweight to the political posturing that constitutes our government.  But, information would also quell controversy.  So, facts are often inconvenient.  In a very real way, politicians and the news media rely on an ignorant public that is susceptible to specious reasoning.

A responsible media would have endeavored to make sure that people understood what the “debt ceiling” is.  But, if everyone understood the “debt ceiling”, the controversy would go away and the Republican strategy would be revealed as hollow.

In a nutshell, this is what the “debt ceiling” is:

In the early days of the republic, Congress would pass bills to establish institutions or programs; and, then, would need to authorize the Treasury to create and sell financial instruments (bonds, Treasury Bills, etc.) to actually fund those institutions or programs.  As the nation grew, and government grew, things got more and more complicated, making the process of funding government expenditures more cumbersome.  In 1917,  the United States entered World War I and things became even more cumbersome.  Congress then passed a measure that would establish a “debt ceiling” that would cap the amount of debt the Treasury could create.  The Treasury then had the responsibility to sell bonds and other instruments to fund what the Congress had instituted — up to the “debt ceiling”.

From time to time, the Treasury would notify the Congress when the “debt ceiling” was approaching.  This function served a useful purpose for a number of reasons.  One had to do with the way federal budgets were established before 1974; another had to do with ensuring that the national debt is monitored and understood. But, by and large, raising the “debt ceiling” was a routine, housekeeping task.

In 1979, Dick Gephardt initiated a parliamentary rule that eliminated the 2nd step in funding government expenditures.  Instead of having a two step process in which the Congress authorized appropriations and then voted to fund them at a later date, the “Gephardt Rule” fused the two steps:  the “debt ceiling” was “deemed raised” when the appropriations were made.  This made sense because the only time that a “debt ceiling” dispute might be valid is when a new Congress needs to raise the “debt ceiling” to accommodate obligations raised in a previous Congress.

In 1995, that’s exactly what happened.  The elections of 1994 swept 52 new Republican members into the House giving that party control for the first time since 1955 (the Republicans also gained control of the Senate with 9 new Republican Senators.)  The Republicans campaigned on the “Contract With America” which essentially aimed to shrink government, reduce taxes and eliminate social welfare programs.  The new Congress repealed the Gephardt rule.  This paved the way for budget controversy and government shutdowns in both November and December of 1995.

The 113th Congress began in January of 2013.  One of the principle issues of campaigning was President Obama’s “Affordable Care Act”; the President vowed to protect and implement it and Republicans promised to repeal or defund “Obamacare”.  The President won reelection and Republicans maintained control of the House.  Despite the futility of the exercise, the House voted dozens of times to repeal Obamacare — measures that would never be passed in the Democratic Senate.  Failing to do legislatively what they had promised to do, the House determined to use the “debt ceiling” as leverage to delay or defund “Obamacare”.  Fortunately, that effort failed because President Obama didn’t capitulate at the last minute as Republicans apparently expected (his capitulation in 2011 fueled those expectations).

I say fortunately because, whether the Affordable Care Act is good policy or bad policy, using the anachronistic “debt ceiling” as leverage is bad tactics.  To put it very simply, imagine that “debt ceiling” negotiations came to be business as usual with the US government.  What incentive, then, do fiscal conservatives have to rein in spending in the legislative context?  Wouldn’t it make more sense to authorize appropriations without compunction, knowing that doing so would create a “debt ceiling” crisis which would then need to be dealt with?  Concessions are much easier to come by when a catastrophe is in the offing.

In the 19th century, following the Civil War legislators worried that representatives from readmitted southern states would create havoc by blocking payment of the debts the Union had incurred defeating them.  The 14th Amendment was ratified which, among other provisions states that “the validity of the public debt of the United States . . . shall not be questioned” (the elipsis represents language that specifically references debts incurred fighting insurrection or rebellion).

Some constitutional scholars believe that the 14th Amendment empowers the president to circumvent a “debt ceiling” controversy; President Obama and his legal team disagree.  I’m no constitutional scholar but it seems to me that the intransigent Republicans (or intransigent Democrats sometime in the future) should consider the intent of this Amendment very carefully.  Unfortunately, I’m not confident that our current Congress is wise enough or decent enough to understand how the 14th Amendment underscores its responsibilities.

I fully expect a replay of this farce in late January was we approach another “debt ceiling”; hopefully the President’s vow to not negotiate over paying for already incurred obligations will dissuade House Republicans (particularly because he didn’t back down this time).  But “hope” is a fairly weak concept.  In a way, “hoping” for something is a way to avoid responsibility.  On the other hand, “hoping” is an acknowledgment that one has little or no control over what may happen.  In the short term, with the 113th Congress in power, that is all too true.