As part of President Obama’s initial offer on a plan to deal with the so-called “fiscal cliff,” the administration proposed doing away with requiring Congressional action to increase the debt ceiling. Instead, the debt ceiling would automatically accommodate the amount of debt Congress’ budgets accumulate, unless Congress acted to prevent an increase.
Republicans were apoplectic, with Sen. John Cornyn (R-TX) calling it “outrageous” (while displaying that he doesn’t actually understand how the debt ceiling works). Sen. Max Baucus (D-MT), though, rightly noted that the way for Congress to not increase the debt is to simply not pass budgets that increase the debt:
“It’s anachronistic,” said Senator Max Baucus, a Montana Democrat and chairman of the Finance Committee. “We’ve already voted on spending and revenue, and so the debt ceiling is just a confirmation of what we voted on.”
As the Government Accountability Office noted, “The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.” Having the debt ceiling as a separate vote that Congress must take merely gives a determined minority the ability to take it hostage, threatening the entire economy with it.