We are in the middle of a debate over raising the debt ceiling. At the end of the day, we will have to raise the debt ceiling. But this will happen as the result of a negotiation between the Republican controlled House of Representatives, Democratic President Joe Biden, and a democratically controlled Senate. There’s plenty of room to consider reform of the debt ceiling process in the future. But in the near term, this is no time for constitutionally dubious tactics, or other ways of trying to get around the core principle that ultimately Congress has to authorize debt issued by the government. I will consider four points. One, why we must raise the debt ceiling to why we have the debt ceiling limit in the first place and Congress’s constitutional role in raising debt. Three, why this is not the time for on the fly reform to the process, or even worse, employing novel and dubious constitutional and arounds and for why What is needed is a negotiated settlement. First, Congress must raise the debt ceiling sometime this summer, as early as June, the government will reach a point where it cannot pay its obligations. Congress has previously authorized that the United States may have a debt of up to $31.4 billion. But based on previously enacted spending appropriations, and previously enacted tax laws, the government will need to incur more debt to pay its obligations. The consequences for not raising the debt ceiling are enormous. Government might not be able to pay for interest for bondholders, Social Security checks, salaries of government employees or for other important immediate needs. But the larger consequences are even scarier. Not paying our obligations, or even cutting it too close to the time when core obligations are due, could lead to a dramatic loss of confidence. It could lead to the downgrading of our debt, disruption of financial markets, and deep and sudden recession not just in the United States. But throughout the world. The United States is generally seen as a place that pays its bills. And undermining confidence in the US ability to pay is a disastrous experiment that no one wants to see play up. Second, why do we have a debt ceiling limit at all? At the heart of the matter is Congress’s constitutional power to spend, tax and borrow money. Article One section eight of the Constitution lays out these powers and specifically notes that Congress shall have the power to, quote, borrow money on the credit of the United States. Over the years Congress has exercise this power in different ways. In earlier times, Congress issued much more specific direction to the federal government to float individual bonds or loans for specific purposes. The current debt ceiling limit system goes back a century and the intent of the system was to allow Congress to authorize debt in a simpler way on a larger scale, rather than requiring many requests for issuing debt. Third, we should not see quick reforms or end arounds the debt ceiling there are legitimate criticisms to our current debt ceiling process, and serious discussions about long term reform would be welcome. But now, on the edge of a potential crisis is not the time to lament the process or expect fundamental reforms. There is too much negotiation over the near term solution that we should take up those discussions for long term reform after this crisis has been averted. Even more troubling are suggestions that the President might get around the debt ceiling using constitutionally novel solutions. Under multiple proposed theories, the President would simply ignore the debt ceiling and issued debt above the limit to pay for our obligations. These solutions would be damaging themselves. Resolution of the constitutional issues might not happen quickly. The doubts raised by these actions might themselves cause a lack of confidence. And ultimately, they would get away from the core constitutional provision that Congress must authorize borrowing of money on the credit of the United States. Fourth, what is needed is negotiation. President Biden and Democrats began with the position that they would agree to a debt ceiling increase but with no other conditions. The Republican House of Representatives has now passed a bill to raise the debt ceiling, along with spending restraints and policy changes. At the end of the day, Congress will not adopt Democrats proposal of a clean debt ceiling bill or the Republican House Bill. It will be somewhere in the middle. This negotiation is fraught and needs to happen quickly, but there is no other way
