Biden’s Debt-Ceiling Deal Passes House; Senator Warren Vows Repeal of Debt Ceiling

Congressman Dusty Johnson voted with his Speaker last night to approve President Biden’s debt-ceiling deal and avert a global economic catastrophe. H.R. 3746 passed 314–1117, with 165 Democrats and 149 pragmatic Republicans voting aye and 46 Democrats and 71 Republicans voting nay. 52 Democrats had to ride in and quash a radical right-wing rebellion on an earlier 241–187 procedural vote. So, thanks, Dusty, for some brief sensibility, but let the record show that, on balance, Democrats are the leaders willing to make sacrifices to protect America’s economic security while Republicans lean more toward the Trumpist practice of creating chaos and not paying bills.

The debt-ceiling deal now goes to the Senate, where Senator Elizabeth Warren of Massachusetts is still weighing the pros and cons of the deal:

Elizabeth Warren doesn’t like much at all about the deal to raise the debt ceiling. The only reason she might vote for it is hardly an endorsement: default would be worse.

“We have to weigh the consequences of default,” the progressive Massachusetts senator said in an interview, “against the pain that Republicans are trying to impose on hungry Americans, students, our climate and the Republicans’ constant enthusiasm for protecting billionaire tax cheats” [Burgess Everett, Holly Otterbein, and Nicholas Wu, “Why the Left Held Its Fire on No-Win Debt Deal,” Politico, 2023.06.01].

…and, with her usual straightforward smarts, is pointing out that the problem here is that we shouldn’t have a debt ceiling:

So as Warren deliberates how she herself will vote, her mind is already on how to avoid this next time.

“Democrats need to make it a top priority just to get rid of this debt ceiling. The Republicans have shown us enough times now how they plan to use it,” she said. “And if we don’t learn from that, shame on us” [Everett, Otterbein, and Wu, 2023.06.01].

If we want to limit the debt, we have to do it at the front end, when we decide to spend. In our personal family budgets—which kitchen-table counting Republicans often err in analogizing to the very different world of fiscal policy and global macroeconomics but which here may illustrate—if we don’t want our debt to surpass some arbitrary level—say, $250K, or 20% of our income—we don’t go out and buy a new car after we’ve reached that limit, at least not until we’ve paid down enough of that debt to take out that car loan. The bank may help us respect that debt limit: if Wells Fargo sees you’re already spending 50% of your income paying past obligations, they probably won’t float you a loan for a big new purchase.

But if you are at your personal debt limit, you don’t get to turn to the folks who already hold your mortgage and say, “Sorry! I’ve just declared a personal debt ceiling, and making this month’s house payment would violate that personal debt ceiling, so I’m not sending you a check this month.” You don’t get to tell the guys mowing your lawn, “Thanks for coming, and I know we signed that contract for weekly service, but my personal debt ceiling means I’m not paying this week.” The bank, the mowing crew, and your other creditors give not one hoot about your arbitrary limits; they want their money for services rendered and they have a right to it.

Ditto the government, which is us: when we buy tanks and guns, when we make laws promising retirement checks and health coverage, when we appropriate federal funds and incur contractual obligations of any sort, we have an obligation to pay those obligations.

Besides, an arbitrary debt ceiling pretending to hamstring the payment of those obligations probably violates the Fourteenth Amendment:

The Public Debt Clause says “The validity of the public debt of the United States, authorized by law, … shall not be questioned.” That 1868 provision was intended primarily to prevent repudiation of Civil War debts. But the Supreme Court in Perry v. United States (1935) held that all federal debt is covered: The constitutional text applies “to the government bonds in question, and to others duly authorized by the Congress.”…

Here are my conclusions, tempered by awareness that legal authorities across the ideological spectrum have wide‐​ranging views: First, duly enacted appropriations are legally the counterpart of “public debt … authorized by law.” Second, default on public debt, like repudiation, casts doubt on the debt’s “validity,” and therefore is unconstitutional under the Public Debt Clause. Third, a congressional ban on all funding sources to pay principal and interest would lead ineluctably to default, and is thus unconstitutional as well. But fourth, a debt ceiling that forecloses only one source of funding, leaving open several alternative sources, passes constitutional muster. On the other hand, if default loomed because Congress and the president were unable to agree on a solution, I believe the president would be justified in breaching the debt ceiling [Robert A. Levy, “Is the Debt Ceiling Unconstitutional? What About Default?” Cato Institute, 2023.05.08].

We probably won’t get to test the debt ceiling against the 14th Amendment or my preferred solution of the trillion-dollar coin; the Senate mostly recognizes the reality of divided government and the need to avert economic disaster and will likely pass the Biden deal before the Monday deadline. But expect Senator Warren to be on the phone after Monday working to hold the Senate and the White House, retake the House, and use renewed Democratic majorities to repeal the dumb idea of the debt ceiling.