The US House on Tuesday is set to consider a bill that would raise the nation’s debt ceiling. Right now, that legislation is almost certain to get voted down. Republicans will oppose it in block, since it includes no large budget cuts that might make it more palatable. Many Democrats may cast “no” ballots as well, given that voters oppose a debt-ceiling hike.
So if the thing is doomed, why bother to vote on it at all?
That’s a good question. It has different answers depending on the political context in which it is viewed.
Republican House leaders say they have scheduled the vote as a way to demonstrate support for their position that any change in the debt ceiling must be accompanied by deep spending cuts. The debt bill’s failure, goes this theory, will expose how few lawmakers back the Obama administration’s call to separate consideration of the debt ceiling from consideration of a long-term fiscal plan.
“The reason we are having the vote is to demonstrate there is absolutely no support for what the administration has been asking for. If we’re going to raise the debt limit, the administration’s going to have to get very serious about cutting spending,” said Kevin Smith, a spokesman for House Speaker John Boehner (R) of Ohio, according to the Associated Press.
But Stan Collender, a federal budget expert and partner at Qorvis Communications, says that the failure of this bill has no predictive value as to the fate of any future effort to raise the debt ceiling.
A debt-ceiling bill that included deficit reduction might be just as likely to lose, writes Mr. Collender in his weekly column in Roll Call. Some members would dislike the deficit reduction measures. Others would think they might not go far enough. Some GOP members elected with tea party support have pledged to never vote to raise the debt ceiling, on principle.
From the point of view of Collender, it’s possible that the reason the debt-ceiling bill is coming up now is to provide political cover for Republicans.
“The leadership may have finally realized that, with polls showing a substantial majority of Americans opposing an increase in the borrowing limit, many House members – especially middle-of-the-road Republicans – have to be given a chance to vote against the bill now so they will be able to vote for it later,” he writes.
An increase in the debt ceiling is inevitable. If it does not occur at some point, the United States will be forced to stop paying its bondholders, and the nation’s credit will collapse, with dire consequences.
Former Obama budget chief Peter Orszag predicted recently that it will require “temporary turbulence” in the bond market to get lawmakers to agree on a debt-ceiling compromise package that includes some kind of long-term deficit reduction.
His scenario is similar to what happened with the original House vote on TARP, the Troubled Asset Relief Program to bail out financial institutions. On Sept. 29, 2008, lawmakers rejected TARP, only to see the Dow Jones Industrial Average plunge 777 points in a single day. The measure passed on a second House vote held on Oct. 3.
“That’s the kind of force that I think will be required to bring the parties together [on the debt ceiling],” said Mr. Orszag in a May 26 appearance at the Institute for International Economics in Washington.
A final package, Orszag says, will be light on specific budget changes but heavy on targets and caps – with some kind of backstop mechanism that may require automatic reductions if government spending rises past a certain level.