Idea: How to get Republicans to raise the debt ceiling without a compromise
by Alan Cohen
Much has been written about the debt ceiling, particularly in the summer of 2011 when we had the last showdown. It looks like another is looming. Briefly, the US has already authorized lots of spending on things like Social Security benefits, government contracts, etc. This spending exceeds the amount of money being taken in through taxes, etc. This means that the US needs to borrow money to cover what it has agreed to do. However, in order to borrow more money, congress needs to separately authorize an increase in the total amount of debt that can be taken on. And Republicans, not wanting to have more debt, don’t want to raise the debt ceiling this way.
This is as if you signed a contract for renovations on your house knowing you’d have to borrow money for it, but after the work is done you tell the contractor you can’t pay because you’d have to go too far into debt. You shouldn’t have done the renovations to begin with. The Republican goal is to use the threat of defaulting on our obligations to force cuts in spending they want. It seems to me like blackmail – holding the credit rating and the moral reputation of the country hostage to their political goals. And here is how to stop them:
If the US defaults, we don’t default on everything. After all, we have a lot of financial obligations, but also a lot of tax revenue. We would thus have to choose what we don’t pay. Do we stop paying back bonds to investors who lent the government money, and were promised their due? Do we stop sending out Social Security checks to the elderly? There are many options, none of them good. But who decides who gets paid?
Well, that would be the Treasury Department. And therein lies the power to force the Republicans to approve an unconditional debt ceiling increase. If they don’t, all payments related their respective states or districts will stop. The threat should be very explicit: payments will stop to the constituencies of anyone who doesn’t vote to increase the limit, regardless of party. If the motion is not brought for a vote in the House, funds will be witheld from constituencies of everyone in the majority party. This means no checks for social security for the elderly in those districts. This means no payments for construction projects there, no payback to bond holders with addresses there, nothing.
Of course, one complicating factor is that there are both congressional districts (the House) and states (the Senate), and individuals fall into two jurisdictions, possibly represented by people who do not vote the same way. What if your senator votes to approve the increase but your representative does not? Well, split the difference – you get half the payment.
If the math doesn’t work out right – for example, if, after witholding payments from all contrarian constituencies, there is still money left over that could be paid out – then this should be paid out proportionally. The important point is that the pain be delivered to the contrarian districts.
The threat will never have to be followed through, of course. No representative would want to risk having the seniors in their district forego social security checks, it would be political suicide. The important point, however, is that the threat be public, credible, and fair. By fair, I mean that it must be blind to party or to any other considerations, and that it be made explicit why this scheme is being used: that it allows voters to reap what they have sowed by electing those representatives. It lets the consequences fall most heavily on those who believe in it. If the debt ceiling is not raised, it is thus the most fair (though still disastrous) way to deal with the problem. It is not political payback, but doing what is right by giving voters what they asked for, constituency by constituency.
I should thank Matthew Yglesias, who provided the inspiration for this in his post today. Comments? Thoughts? Leave them below and I’ll respond…