How Lawmakers Can Increase the Debt Limit
The federal government hit its $31.4 trillion debt limit earlier this month. The Treasury Department estimates it will exhaust the array of “extraordinary measures measures” it uses to keep the government below its debt cap by early June. Congress must authorize more borrowing by that date to avoid defaulting on the government’s debt.
Yet it is not presently clear how Congress will increase the debt limit by Treasury’s June deadline. Many Republicans – especially in the House – oppose authorizing more debt without simultaneously reducing government spending. For example, Kevin McCarthy, R-Calif., secured the votes he needed to become Speaker only after agreeing to attach spending cuts to any debt limit bill. On the other side of the debate, Democrats – and some Republicans – are reluctant to legitimize House Republicans’ effort to leverage the debt limit to cut spending. That is why leading Democrats are refusing to negotiate over the debt limit altogether. They insist instead that House Republicans back a clean debt limit increase (i.e., a bill without spending cuts and/or other fiscal reforms).
But this disagreement does not mean that Congress cannot increase the debt limit before Treasury exhausts its “extraordinary measures” in June. Lawmakers can overcome the present impasse by setting up a future House debate in such a way as to make increasing the debt limit – with or without spending cuts – easier. Republicans can force Democrats to negotiate with them over how to raise the debt limit by neutralizing their claim that negotiating over the debt limit will cause the nation to default. And Democrats can circumvent Republicans’ agenda control in the House and bring a debt limit bill directly to the floor where a bipartisan majority can vote for it. Finally, lawmakers can pressure enough House Republicans to support increasing the debt limit without spending cuts by waiting until the last minute and starting the process in the Senate. Finally, Democrats and Republicans can use the budget reconciliation process to increase the debt limit discretely.
In 2011, conservative opposition to a clean debt limit increase forced reluctant lawmakers to cut spending. This example suggests that House Republicans can force Democrats to the negotiating table in the present debate if they can credibly threaten not to raise the debt limit without cutting spending. Republicans can make their threats more credible by neutralizing Democrats’ claims that negotiating over how to increase the debt limit is irresponsible. To that end, some Republicans have proposed legislation requiring the government to pay interest and principal costs on the public debt with incoming revenue before paying other claims on the federal Treasury.
Republicans’ prioritization bill is designed to temporarily increase their leverage in a future debt limit debate by addressing market concerns. It is not an alternative to raising the debt limit more generally. But Democrats nevertheless call the effort “default by another name.” Their messaging is logical, given that acknowledging the legitimacy of negotiating over the debt limit weakens their position in a future debate. President Biden and Democrats in the House and Senate oppose the bill. And their opposition makes it unlikely that the proposal will become law before June.
Democrats – and some Republicans – are looking to bypass the Republican-controlled committees and bring a clean debt limit bill directly to the House floor for a vote. Rule XV, clause 2 stipulates that lawmakers can file a discharge motion to force a committee to send a “public bill or public resolution that has been referred to it” to the House floor. Lawmakers can also file a discharge motion to force the Rules Committee to send a special rule to the full House regulating a bill’s floor debate and amendment process.
Lawmakers can therefore use the discharge process to circumvent the Ways and Means Committee – which has jurisdiction over the debt limit – and bring a clean increase to the floor where a bipartisan majority can pass it. They can also use the discharge process to circumvent the Rules Committee and bring a special rule to the House floor that expedites debate and prohibits Republicans from offering amendments to cut spending to the debt limit bill.
Yet other provisions in Rule XV complicate the effort to use it to increase the debt limit over Republican opposition. For example, its built-in delay mechanisms and transparency provisions require lawmakers to go on record for a prolonged period in support of a clean debt limit increase. Specifically, the rule allows lawmakers to discharge a committee from further consideration of legislation only after it “has been referred to it for 30 legislative days.” And it permits lawmakers to discharge the Rules Committee from further consideration of a special rule “that has been referred to it for seven legislative days.” In addition, a “majority of the total membership of the House” (218 lawmakers if there are no vacancies) must sign the discharge motion before the House votes on it. The rule requires that the House Clerk regularly publish members’ signatures in the Congressional Record. It also allows lawmakers to remove their signatures in response to constituent and/or party pressures before the House votes on the discharge motion. These provisions could make it difficult for individual lawmakers – especially Republicans – to go on the record and stay on the record in support of a clean debt limit increase if their constituents and colleagues oppose it.
STARTING IN THE SENATE
Democrats can pressure House Republicans to vote for a clean debt limit increase by waiting until the last minute and starting the process in the Senate. Waiting until the last minute to send a clean debt limit increase to the House confronts Republicans there with a take-it-or-leave-it proposition to raise the nation’s borrowing cap without cutting spending or defaulting on its debt. This fait accompli could cause enough Republicans to reluctantly support a clean debt limit bill by leaving them with no other option.
But waiting until the last minute and starting the process in the Senate does not guarantee success. While some Republican senators are less hawkish on the debt limit, others demand that any increase include spending cuts. And Republican opponents of a clean debt limit bill could filibuster it, effectively forcing Majority Leader Chuck Schumer, D-N.Y., to file cloture to end the debate. Rule XXII stipulates that three-fifths of the Senate duly chosen and sworn (typically 60) is required to invoke cloture. In contrast, a majority of senators (typically 51) are required to pass legislation.
Lawmakers can use the budget reconciliation process to overcome a Senate filibuster and send a clean debt limit bill to the House. Created in 1974, reconciliation makes it easier for Congress to align (i.e., reconcile) the revenue, spending, and deficit levels derived from permanent law with those specified in the congressional budget resolution.
There are three steps to increasing the debt limit using the reconciliation process. First, Congress must pass a budget resolution that includes reconciliation instructions. Reconciliation instructions are directives to specific committees in the House and Senate to report legislation that changes future spending, revenue, or deficit/debt levels by the amounts specified in the budget resolution.
Second, the Ways and Means and Finance committees write legislation increasing the debt limit and report it to the full House and Senate, respectively. Lawmakers may include spending cuts and/or revenue increases in that legislation. But those spending cuts and/or revenue increases must be under the jurisdiction of the committees that received reconciliation instructions in the budget resolution.
Once the committees report their debt limit bills, lawmakers consider them on the House and Senate floors under expedited procedures. Specifically, debate time is limited to 20 hours, and amendments are restricted.
Lawmakers can minimize the political fallout associated with increasing the debt limit by waiting until the last minute to add reconciliation instructions to the budget resolution. As a result, the House- and Senate-passed budgets do not have to include reconciliation instructions that explicitly authorize using the expedited process to increase the debt limit. And lawmakers do not have to acknowledge that they intend to use reconciliation to make raising the debt limit easier. This is because lawmakers can add – or “airdrop” – reconciliation instructions into the budget resolution before Congress votes on the final version. Specifically, lawmakers can add debt limit instructions to the budget resolution during a House-Senate conference committee convened to negotiate any differences between the two versions.
Senate Rule XXVIII technically prohibits lawmakers from adding new language to legislation during a conference committee. The rule stipulates, “Conferees shall not insert in their report matter not committed to them by either House.” Senators enforce the rule by raising points of order during floor debate on a conference report (i.e., the compromise budget agreement). If the Senate sustains the point of order that the conference report includes a provision not committed to it by either the House or Senate, it is removed from the bill.
But a point of order would not remove an airdropped debt limit instruction in this scenario. This is because senators created an exception to Rule XXVIII in 1987 for debt limit reconciliation instructions. According to Senate precedent, a provision “not entirely irrelevant to the subject matter contained in either version” of the budget resolution does not violate Rule XXVIII because the budget resolution “specified a figure for the public debate and also contained reconciliation instructions to the Finance Committee.”
Lawmakers can overcome their differences and pass legislation increasing the debt limit in one of two general ways. The first way is by persuading lawmakers to support a bill – with or without spending cuts – over the course of a reasoned debate in which they weigh the merits of all positions judiciously. The second way is by setting up the debate to pressure lawmakers to support increasing the debt limit without spending cuts, even if they are not persuaded to do so on the merits. And lawmakers can set up a future House debate in several different ways.