The debt limit needs to be raised — and ultimately, the dangerous and pointless limit should be abolished entirely and replaced with a provision (like a statutory debt-GDP limit) that actually enforces fiscal responsibility rather than destroys it. But for now, Democrats need to find a way forward.
Senate Minority Leader McConnell is taking a hard line, trying to force Democrats to go it alone. As William Galston writes in the Wall Street Journal, “McConnell’s tactics are patently partisan,” but President Biden and Majority Leader Schumer “do not have the power to make him change course. If Democrats don’t discharge the responsibility Mr. McConnell has thrust upon them, the country faces an economic crisis.”
Conservatism in its genuine form honors financial obligations. Mitch McConnell refusing to address the debt ceiling means he’s refusing to pay the $7.8 trillion in credit card charges that accrued under HIS watch. That’s not conservatism. That’s dishonor.
— Rep. Dean Phillips 🇺🇸 (@RepDeanPhillips) October 5, 2021
As we wrote yesterday, failure would be devastating. Unemployment would surge, stocks would plummet, and a major recession would begin overnight.
McConnell is trying to force Democrats to raise the debt limit as part of their reconciliation spending bill — an effort to speed up the clock that Schumer has rejected. McConnell is leaning on Treasury Secretary Janet Yellen’s assessment that the limit will be reached within 12 days; Schumer wants more time to finish reconciliation.
But the October 18 doomsday date is not certain. Bloomberg Government’s Jonathan Nicholson says the Congressional Budget Office has set the deadline at the beginning of November, and even after that, Treasury “still has ‘couch cushions’ to turn over for extra borrowing capacity in a pinch, if needed.”
Some say a president can ignore the debt limit by invoking the 14th Amendment, which states that “the validity of the public debt of the United States, authorized by law…shall not be questioned.” During debt limit fights in 2011 and 2013, some scholars began advancing the idea that the amendment permits a president to continue borrowing after the debt limit is reached.
Another idea: A 1995 law intended to set rules for the issuing of commemorative coins for collectors states that the Treasury Secretary “may mint and issue platinum coins in such quantity and of such variety as the Secretary determines to be appropriate.” In 2010, a blogger commented that the Secretary could legally “mint a $1 trillion coin.” While the idea was meant half-jokingly, it was raised in 2011 and 2013 as a potential debt limit fix. New York Times columnist Paul Krugman — a Nobel Prize-winning economist — says “the Biden administration should mint a $1 trillion platinum coin.”
Sound silly? Maybe so, but is it any more ridiculous than forcing the nation to the brink of default on a regular basis?