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Date TimeJuly 25, 2019
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Dems Considered Eliminating Debt Ceiling Entirely in Budget Deal With Trump
Win McNamee/GettyThe House of Representatives approved a sweeping budget bill on Thursday that includes spending hikes for both domestic and military programs and a suspension of high-stakes debt fights until the next presidential administration. The bill, which passed by a 284 to 149 margin, is expected to easily pass the GOP-held Senate when it votes next week, sending it to the president’s desk. The deal’s bipartisan support is the latest evidence of the shrinking influence of pro-austerity voices in national politics. Not only does it usher in some $320 billion in increased spending, but the final language also includes a two-year extension of the debt limit—which Congress must raise in order to continue borrowing to spend the money they’ve appropriated. The measure could have gone even further than the version that passed. That’s because lawmakers considered including a provision in the legislation that would have effectively eliminated the high-stakes debt ceiling fights entirely. According to a source familiar with the talks, the idea of doing away with the debt limit “came up” during the course of negotiations. The source said that “although interest was expressed, the decision was that it was too difficult to do in this bill.” Other sources cautioned that the proposal was not seriously considered, if discussed widely at all. And a senior Democratic aide said that by the time negotiations entered their critical, final stages—with House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin taking the lead—the notion of getting rid of the debt ceiling was never actually broached. But had it been, Pelosi would have found a receptive audience. According to three people with knowledge of the deliberations, both Mnuchin and President Donald Trump have, as recently as May, discussed privately how counterproductive the debt limit is to the legislative process, and that it would be ideal to eliminate it altogether.“For many years, people have been talking about getting rid of [the] debt ceiling all together, and there are a lot of good reasons to do that,” Trump said in September 2017. “So certainly, that's something that will be discussed. We even discussed it at the meeting that we had yesterday. It complicates things, it's really not necessary.”It's Time to Kill the Debt LimitWhy neither Pelosi nor Mnuchin raised the idea of eliminating the debt limit in their talks is not entirely clear. But Democrats suspect that both he and the Speaker recognized it would have been an impossible lift in the Republican-run Senate, where GOP lawmakers view a vote to raise the ceiling as a means of extracting future spending cuts or policy concession. Republicans did as much during the Obama years until then-President Obama said he would no longer negotiate on raising the debt limit, on grounds that the default that would be triggered by not doing so would be too cataclysmic to even ponder. As Democrats came out in support of the just-agreed upon deal, they did so with trepidation that their GOP colleagues would weaponize the debt limit once more should a Democrat unseat Trump in November 2020. Democrats, said Rep. Ro Khanna (D-CA) in a Tuesday statement, “are losing our leverage by agreeing to a lifting of the debt ceiling for the remainder of this term but then in turn handcuffing a future progressive President in 2021.”But even those fears were not enough to compel Democrats — including Khanna — to oppose the bill in significant numbers. He told The Daily Beast before the vote on Thursday that he’s supporting the deal because it boosts domestic spending by $100 billion. “I think gambling with our future on these domestic programs is not worth it,” he said, but reiterated Democrats needed to fight to make sure the debt limit isn’t used as a bludgeon in 2021 if a Democrat is elected president. “Anything that extends the debt limit, as long as possible, is better than anything that is a short term extension of the debt limit,” said Sen. Brian Schatz (D-HI), who wants to abolish the vote to extend the borrowing limit for good, and has introduced a bill that would do so. “I don't support using the full faith and credit of the United States as leverage in a partisan negotiation.”Other Democrats took it as a win merely that President Trump backed off from brinksmanship this time around. A two-year extension, said Sen. Mazie Hirono (D-HI), is “a lot better than using the debt ceiling as a way to get the president’s wall. In the scheme of things, it could be a lot worse.”The agreement that the House approved on Thursday was the product of months of negotiations between lawmakers on the Hill and officials in the administration hoping to stave off two looming fiscal crises. The first was a default on the debt, which would have been triggered by the debt limit being reached. The second was the onset of deep cuts to federal spending, known as sequestration, that were laid out in 2011 when House Republicans demanded an austerity package in exchange for extending the debt limit back then. Those automatic cuts were slated to kick in October 1. The final package eliminated the threat of sequestration for good. It also did not include so-called “poison pills,” policy riders on controversial issues like immigration, that could have blown up the process. Though Republicans and even some moderate Democrats in the House largely voted against the measure because of these provisions, most Democrats viewed their opposition as insincere—an easy way to exhibit so-called fiscal conservatism while reaping the political benefits from the extra spending that was passed. They also feared that Democrats had forfeited some negotiating leverage by not setting up another debt limit standoff during the end of Trump’s first term, as opposed to pushing it off to 2021. But that view was not shared widely in the party, where interest has gravitated more towards eliminating the debt limit entirely than in utilizing it politically. “At some point, we should probably, you know, get rid of this sort of permanent Sword of Damocles,” said Sen. Chris Murphy (D-CT), but he added that “it doesn’t need to happen now in order to get my vote.”The Daily Beast asked a number of top Democratic 2020 candidates if they would refuse to negotiate over the debt limit should they win the White House. None responded, save Sen. Elizabeth Warren (D-MA) who didn’t address that specific question but stated that the debt limit “has never made any sense.”“The United States of America should meet its lawfully incurred obligations,” she told The Daily Beast. “But two years is better than one. One year is better than half a year. So, it looks like two years is what we got.”Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.

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