House Republicans are expected to pass their opening salvo in negotiations this week.
This spring, Congress finds itself standing at a familiar precipice. Once again, if lawmakers don’t agree to suspend or raise the debt ceiling, the federal government risks defaulting on its loans, which would likely cause a massive economic crisis. Currently, House Republicans are on the verge of passing a bill they view as an opening salvo to negotiations.
It’s a position that congressional lawmakers have been in many, many times before, and it’s one that they have to resolve ahead of a default date that could come as early as June.
At issue is not whether the debt ceiling — a legal cap on how much the US can borrow — should be raised, but how. Democrats, led by President Joe Biden, insist that Congress pass a “clean” debt ceiling increase that does not include any trade-offs to guarantee its passage. House Republicans, meanwhile, are eager to pass spending cuts in exchange for approving any debt ceiling increase, with some saying they’re unwilling to compromise on this point.
This standoff has led to concerns that the US could come dangerously close to actually defaulting, which it came within 72 hours of doing in 2011. As that experience made clear, the fact that the debt ceiling is spurring a stalemate is nothing new.
“There is considerable deja vu,” David Kamin, an economic adviser for the Obama administration, previously told Vox.
The reason Congress continues to land in the same place is that raising or suspending the debt ceiling, much like funding the government, is something it must address on a regular basis. Every few years or so, Congress has to either increase or suspend the country’s debt ceiling as it accrues more debt. This debt comes from covering government expenses including paying for the military, health care programs, and Social Security.
If it fails to address the debt ceiling, Congress would ruin the US credit rating and put its ability to pay its bills in doubt. That would likely trigger a domestic economic crisis, if not an international one. Were the US to default, interest rates would probably go up and unemployment would increase, potentially putting thousands or even millions of people out of work.
Because it’s must-pass legislation and requires the backing of both chambers, the party that’s out of power in the White House or in the minority in Congress has often used this measure as leverage to extract policy concessions or send a political message. That has erased any incentive to reform the process, even though Congress could do away with the debt ceiling if it wanted to. (More on that below.)
“I’m not sure there’s all that much desire to take it off the table in terms of members of the minority losing this political thing they have to fight with,” University of Texas Austin government professor Alison Craig previously told Vox.
In recent years, Republicans have been more aggressive in demanding concessions from Democratic administrations in exchange for their support for a debt ceiling increase, though both parties have utilized such votes in the past to make a point. That’s left the US in a dangerous cycle in which the minority party tries to squeeze every concession it can out of the process, debt ceiling negotiations go down to the wire, and any miscalculation on the part of lawmakers could inadvertently cause a default. What is the debt ceiling and why does Congress have to raise it?
As Vox’s Dylan Matthews has explained, the United States is unique in having a debt limit that lawmakers need to suspend or raise every few years.
