Debt Deal Shows How Process Becomes Policy
This column appeared in Roll Call on August 2, 2011.
If you got the impression during the debt limit imbroglio that our leaders were creatively trying to extricate themselves from a box of their own making, you’ve been cribbing from Chicago Mayor Rahm Emanuel’s manual: Crises (fabricated or not) can advance worthy goals—even restoring fiscal sanity. It’s getting there that sometimes seems insane.
I thought Treasury Secretary Timothy Geithner was joking when he hinted to reporters that Section 4 of the 14th Amendment might contain a magical solution to the impending default: “The validity of the public debt of the United States, authorized by law...shall not be questioned.” That was until President Bill Clinton said that if he were still president and Congress failed to act, he would invoke the 14th Amendment to declare the debt ceiling unconstitutional.
That “constitutional option” was too much for President Barack Obama’s former Harvard law professor, Laurence H. Tribe, who declared in a July 7 opinion piece that, “Nothing in the 14th amendment...suggests that the president may usurp legislative power to prevent a violation of the Constitution.”
Then, along came Senate Minority Leader Mitch McConnell (R-Ky.) with a fallback plan in the event the “grand bargain” between Obama and Speaker John Boehner (R-Ohio) did not come together. Resembling the constitutional option, the McConnell plan proposed delegating to the president Congress’ authority to increase the debt limit in three increments in return for his recommending equivalent spending cuts.
Congress could pass joint resolutions disapproving the debt limit increases but (surprise, surprise) would not be expected to muster the two-thirds vote of both chambers to override the likely presidential vetoes. The McConnell plan, known as Plan B (for Byzantine), was characterized by Sen. Tom Coburn (R-Okla.) as “a political response”; but then, that’s what Congress does.
Senate Majority Leader Harry Reid (D-Nev.) jumped into the game by tweaking Plan B to include a bipartisan, joint committee of Congress to propose major spending cuts this fall that would have to be voted up or down.
Not wanting to be left out, the Senate’s “gang of six” was resuscitated to propose a new deal based on the Simpson-Bowles deficit commission’s recommendations. Framed much like the reconciliation process, it would issue directives to the committees of jurisdiction to produce specified deficit savings, including elimination of tax breaks, again subject to a mandatory vote.
As the clock ticked down, leaders furiously worked this Rubik’s Cube of options to find a combination of fixes that would click with sufficient majorities in both chambers.
Boehner and Reid subsequently produced similar procedural melds: delegating debt increase authority to the president, spending caps enforceable by sequestration (across-the-board spending cuts) and a joint committee to recommend further savings. They differed only on where the cuts should occur and how many debt increase votes there should be before the 2012 elections. Nevertheless, their competing plans laid the groundwork for the final deal that came together Sunday.
This is not the first time the debt limit has been used to leverage budget reforms. In 1985, the Democratic House sent the Republican Senate a clean debt limit bill, only to end up in conference with a whole new Senate-passed budget process known as the Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Control Act.
It established a five-year deficit reduction path to a balanced budget, with sequestration if Congress did not meet its deficit targets. The act would later be held unconstitutional by the Supreme Court, be re-enacted and still fail to meet its deficit targets.
The targets were replaced in the Budget Enforcement Act of 1990 with discretionary spending caps, again enforceable by sequestration, but also with new pay-as-you-go budgeting to offset any entitlement benefit increases or tax cuts.
From 1995 to 1996, with Republicans in charge of both chambers for the first time in 40 years, a new budget crisis arose when Clinton stood firm against the GOP’s budget-cutting proposals. Not only were there two government shutdowns that winter when continuing appropriations bills (with strings) were vetoed, but a debt limit breach loomed in November.
Although default was averted into the new year with trust-fund borrowing gimmicks, Congress was forced to act in early February to allow Social Security and other retiree checks to be mailed.
Congress enacted another short-term debt limit extension in early March before a final deal was struck at the end of the month. It involved an increase in the Social Security earnings limit, a small-business regulatory flexibility bill and legislation giving the president line-item veto authority (later declared unconstitutional by the Supreme Court).
A balanced budget constitutional amendment (integral to today’s GOP approach) had earlier passed the House in 1995 but failed by one vote in the Senate.
The lessons of past debt limit “crises” demonstrate just how procedurally innovative and convoluted Congressional fixes can get—even to the point of pushing the Constitution’s envelope.
If these procedural ropes and pulleys seem to set the Capitol Dome spinning, welcome aboard the Washington merry-go-round, where process not only drives the action but often becomes the policy.