House Debt Ceiling Bill

voting 217 Yes 215 no the House has passed a bill which would increase the debt ceiling, slash spending, and repeal (most of) the IRA. This ends the fun period when we could laugh at Republicans for demanding that Biden negotiate without themselves making a bargaining proposal. The bill is horrible. I am a Democrat in disarray trying to figure out how to respond (and who should respond).

One possibility is to stick to the position that there should be a clean debt ceiling increase (like the 3 enacted while Trump was President). Biden has argued that a decision to honor past commitments should be separate from negotiation over future appropriations (and taxes). This has the advantage of being obviously correct. It has the disadvantage of not being new. The news is that Republicans have finally drafted a ransom note. Continuing to make the exact same obviously correct argument might seem rigid.

Importantly there are now two proposals for budgetary aspects of the debt ceiling bill 0 and not zero. I fear that there will be a compromise somewhere between the Republicans’ insane bargaining position and the Democrats very simple sane bargaining position.

I am tempted to argue that there can be two parallel tracks with Democrats proposing a 2024 budget while also arguing for a clean debt ceiling increase. If I did, I would show my ignorance, since the Biden administration has also made a proposal related to the 2014 budget (I don’t remember if it is a formal 2014 budgetary proposal or just an outline — and I am a political junky). I think Democrats should do something new.

OK who ? The ball is not officially in Biden’s court (it will arrive there when there he is sent a bill to sign or veto). I think that the Senate should consider the House’s bill (that’s what the Constitution suggests). There is a problem with a multitrack approach in the Senate as the Constitution says all tax and spending bills must originate in the House (a purely formal restriction as the Senate can and has amended minor bills with huge amendments).

I have thoughts about amendments to the House bill. I mean first delete most of it of course. Then change the set 2024 non defense discretionary spending to 2022 spending to set it to 2023 (also a sharp cut given inflation) and make other exceptions. Democrats have decided to focus on how the House has proposed slashing the budget of the Veterans’ Administration. I would propose exempting it and some other popular programs: the NIH, Pell Grants, oh and farm subsidies. What ? don’t I hate farm subsidies ? I do indeed, however, it would be very hard for rural Republicans to demand they are slashed (they have already decided that the IRA should be repealed except for the increased ethanol subsidies).

Here proposing a freeze with exceptions is just not serious — once one starts to make exceptions then it is not possible to hold the line. My proposal is absolutely not serious. The aim is to get to nothing accomplished (that is no harm done). The idea is for Democrats to propose spending cuts in the abstract (popular) with exceptions (even more popular) and create trouble for Republicans.

The other, and very key, amendment should be to combine spending cuts with tax increases on extremely high incomes. This is very popular. It fits the narrative of reducing deficits. It is absolutely unacceptable to Republicans in Congress (but is supported by about half of self identified Republicans). It is even better policy than a clean debt ceiling increase and even more popular and something Republicans are very eager to not discuss.

My hope is that faced with the risk of an actual policy debate, Republicans in the House will choose to kick the can down the road with a clean but brief suspension of the debt ceiling. And again and again and again. This means continued harm from alarming investors, but also implies continued attention to competing policy proposals (unlike the Biden administrations now forgotten proposal). I think it is the least bad strategy.