Will Santa Claus bring America a debt limit increase this Christmas? (Photo: Marco Verch/Flickr, Creative Commons License 2.0)

There’s nothing like the threat of impending economic catastrophe to brighten the holiday season.

In October, Congress lifted the debt limit by $480 billion, and Secretary of the Treasury Janet Yellen warns that the government could hit the ceiling by mid-December.  (Yes, you read that right – the Federal government blew through nearly a half-trillion dollars of debt in two months.)  As we’ve explained elsewhere, the debt limit is a statutory cap on how much the Government may owe its creditors. Thus, it takes an act of Congress to provide the Treasury Department with the authority to take on new debt. If Congress does not lift the debt limit again, the government could default on its obligations, which most economists say would wreak havoc on the economy.

Within Congress, both parties have an interest in lifting or suspending the debt limit since neither wants economic disaster. At the same time, both parties have other interests, too. Fiscal irresponsibility never plays well with the public and increasing the debt limit affords minority parties the opportunity to criticize the majority for being reckless with the public’s money. Thus, this year, Republicans will not want to support a debt limit increase. Democrats, on the other hand, will want to get as many Republicans to vote for it as possible to inoculate themselves from charges of fiscal irresponsibility.  Just a few years ago when the Republicans controlled the government and the Democrats were the minority party the roles were reversed.  But despite the histrionics on cable news and social media, no sane legislator wants to see the United States default on its debt.  While there’s a general common interest to raise the debt limit, however, the parties’ other interests complicate the issue.

Whatever interests the parties may have when it comes to a debt limit increase, the odds are that they will see it through, one way or another. In the House, there’s no doubt that a debt limit increase can pass by the majority alone. Though the majority party never likes a party-line debt limit vote, there is no doubt the Democrats will put up enough votes to enact a debt limit bill.

Unlike the House, the Senate is more consensus-driven and the majority has fewer tools at its disposal to move legislation without minority input. The minority may easily speed up or gum up the process, depending on the situation. Normally, this procedural dynamic greatly helps the minority, but today, it puts a little bit of pressure on the minority since they don’t want to help pass the debt limit increase, but they also don’t want the government to default on its debt.

Winning over the minority for a debt limit increase is challenging on a good day, and this time around there are a couple of additional political pressures making it more difficult. For one, Majority Leader Chuck Schumer of New York made himself an obstacle in resolving the issue. In October, Republican Leader Mitch McConnell of Kentucky delivered enough Republican votes to end debate on the debt limit increase, despite intense pressure upon him not to aid the Democrats. Shortly before the vote, Schumer delivered a rather ungracious speech on the Senate Floor, castigating Republicans, saying, among other things, that they “played a dangerous and risky partisan game” (Congressional Record, October 7, 2021, S6990). Not surprisingly, the speech angered the Republicans and even Democratic Senator Joe Manchin of West Virginia, who publicly criticized it. (In addition to Schumer’s speech, Democrats have gloated over McConnell. For instance, both Senator Chris Coons of Delaware and Senator Elizabeth Warren of Massachusetts tossed around the word “caved” to describe McConnell’s maneuver.) Leader McConnell later wrote to President Biden informing him that due to Senator Schumer’s “hysterics” and his “grave concerns” about the Democrats’ Build Back Better Bill, the Republican Leader would “not be a party to any future effort to mitigate the consequences of Democratic mismanagement.”

In addition to Schumer’s faux pas, according to various news reports, some Senate Republicans were disappointed with McConnell’s decision to deliver the votes for cloture for the October debt limit increase. Former President Donald Trump was not pleased with it either and recently released another statement criticizing McConnell’s handling of the issue. While all indications are that McConnell is not at all fond of the former President, he cannot afford to ignore him either. Neither of these political pressures bode well for Republican involvement with another debt limit increase.

Between the political pressures unique to this upcoming debt limit increase and the minority’s normal interest in making it a party line vote, the Republicans will want to have as little to do with the issue as possible. The Senate can vote to shut off debate (via cloture), but this requires a supermajority to succeed, and Republicans would need to vote for it, which is doubtful after the October debt limit increase. The Senate also expedites business by unanimous consent agreements, but this requires no objection from any Senator, and even if some in the party wanted to do this, at least one or more would likely object. The normal paths to passing a bill in the Senate are not necessarily viable options for the December debt limit adjustment.

While the Senate’s usual ways of enacting bills are not promising, Senator McConnell has for months advocated using another method: budget reconciliation. Debate on budget reconciliation bills cannot be filibustered (since debate is limited to 20 hours) so Republicans would not be needed to provide any votes to end debate. Once the debate time is expired, the Senate automatically votes on any germane amendments that have been offered and then on final passage of the bill. If they proceeded with that strategy, the Democrats could simply all vote in favor of the debt limit increase, and it would pass by a simple majority.

Reconciliation presents a path forward that is acceptable to the minority Republicans. From the perspective of the majority Democrats, it’s unappetizing. First, it does nothing to satisfy the majority’s political interest in getting bipartisan support for the debt limit increase.

Advancing a debt limit increase via reconciliation is also unappetizing for a few procedural reasons. First, enacting an adjustment to the debt limit via reconciliation requires that the concurrent resolution on the budget for the fiscal year in question include reconciliation instructions directing the House Committee on Ways and Means and the Senate Committee on Finance to report legislation increasing or decreasing the debt limit by a certain amount. The concurrent resolution on the budget for fiscal year 2022 did not contain instructions on the debt limit, so both the House and Senate would need to amend it to adjust the debt limit. Second, debate on both an amendment to a concurrent resolution and a reconciliation bill would be time consuming. The minority could slow the process considerably by offering a truckload of amendments—many embarrassing to the majority—and the Senate would need to engage in a so-called “vote-a-rama” at the end of the debate on the budget resolution and debt limit reconciliation bill. While reconciliation would allow the majority to enact a debt limit increase, it is certainly not their preferred way to do it.

As unappealing as reconciliation might be, Republicans can speed up the process without having to come to a unanimous consent agreement or vote for cloture. If the Democrats go for reconciliation, they can yield back—not use—all the time entitled to them for debate and refrain from offering amendments to avoid a vote-a-rama. Multiple Republican Senators have floated the idea of not pressing their advantage in the reconciliation process, so reconciliation could be less difficult than the majority might think.

However painful the debt limit increase will be, Congress will need to address it sometime in December. Prior to Thanksgiving, Leader McConnell and Leader Schumer reportedly met in person to discuss the debt limit issue. There’s virtually no indication of what will come of their meeting. Doubtless, they will come up with an agreement—however it may look—since neither of them wants to play the Grinch and allow the country to default this holiday season.