Why Would Congress Want a Debt Limit?

This is a guest post from Scott Adler and John Wilkerson:

Recent reporting on the debt limit debate portrays Republicans and Democrats risking the nation’s economy to promote their respective partisan agendas. Observers cast judgment on who is to blame for the current stalemate, offer predictions about whether House Republicans or the Obama Administration will blink first, and place bets on whether this “Ultimate Partisan Championship” will eventually lead to a government default. However, there is an aspect of this controversy that has received less attention but is of equal concern:  Why are lawmakers having this debate at all? Why does Congress enact legislation that forces lawmakers into the politically uncomfortable position of having to vote in favor of more debt? Moreover, why require debt limit increases that – due to their controversial nature – threaten the fiscal integrity of the U.S. government?

Two important policy objectives help to explain why debt limit debates are difficult to avoid – congressional control of the purse strings and congressional accountability for government spending. Although the Constitution places the power of the purse in the hands of Congress, the Treasury Department oversees borrowing and debt issuance. Without explicit grants of borrowing authority (in the form of debt limit legislation), Congress would cede considerable control over how much the federal government spends overall to the executive branch. Over the last century, debt limit laws (specifically in 1917 and 1939) have evolved from allocating specific and temporary borrowing authority to delegating substantial discretion to Treasury. But Congress continues to assert its constitutional prerogative by placing ceilings on overall government debt – even though it has often sought to minimize the political backlash from such decisions. In the 1980s the House of Representatives adopted what became known as the “Gephardt Rule,” which provided for automatic debt limit increases as part of the budgeting process – thereby allowing House members to avoid voting to increase the debt while continuing to assert Congress’ power over the purse. Democratic and Republican-controlled Houses alike have utilized the Gephardt Rule in the past to avoid having to vote on this potentially explosive issue.

In addition to protecting the purse strings, debt limit debates also serve a loftier purpose of drawing attention to broader issues of governance.  Lawmakers can talk about government debt and overall spending levels until they’re blue in the face, but it is rare that the debate seeps into the public consciousness. Debt limit deliberations serve to, as political scientist E.E. Schattschneider wrote, “expand the conflict” concerning government spending from political insiders to political outsiders.  In waiving the Gephardt Rule this year, the 112th Republican-controlled House forced an explicit vote on increasing the debt limit. This was a calculated effort to focus public attention on federal spending and indebtedness and it seems to have worked. A recent McClatchy-Marist poll indicates that 59 percent of Americans want Washington to make debt reduction the priority.

It comes as no surprise that an opposition party traditionally opposed to higher taxes and social spending would want to shift the debate. Yet highlighting the issue may have been a bigger political gamble than the GOP bargained for.  As former Senator Phil Gramm reportedly said, “never take a political hostage that you are not prepared to shoot.” The implications of going into default or instituting severe and unparalleled immediate cuts in popular and critical federal programs (such as Social Security and military salaries!) are uncharted political waters. Congress has always increased the debt limit – 78 times so far.  Republicans may ultimately be faced with a Hobson’s choice between disappointing key populist constituencies (the conservative/Tea Party wings) whose hopes were raised by many months of rhetoric opposing a debt increase that wasn’t offset by equal spending reductions, and key business financial interests who are concerned about the market implications of a government default.

The American public generally pays little attention to deficits and how they relate to program expenditures and taxes. The current debt limit debate has served a valuable purpose in this regard by focusing media and public attention on an important public policy issue. Surveys also suggest that independent voters are equally likely to blame Republicans and Democrats should the government fail to act on the issue.  The prospect of collective electoral accountability has initiated a rare opportunity for real bipartisan progress on a salient issue of great import.  This occurs more often than many political observers and scholars seem to appreciate, but rarely in recent times on an issue of such public prominence. If there were no imperative to raise the debt ceiling, the chances of serious bipartisan deficit negotiations would be slim to none.

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