History rhymes on debt ceiling

Contrary to claims widely circulated in our contemporary debate, attempting to restrain federal spending by threatening not to raise the debt ceiling is nothing new to American politics.  Our 2011 showdown was certainly an exceptionally bruising episode, but Republicans in the 112th Congress were hardly the bold innovators they are sometimes portrayed as.

As far back as the 1950s, fiscal conservatives in Congress used the necessity of raising the debt ceiling as opportunities for political point-scoring.  Southern Democrat Harry Flood Byrd of Virginia, then the chairman of the Senate Budget Committee, championed the debt ceiling’s discipline against the “reckless” spending of the Eisenhower Administration.  Then, as now, the Treasury engaged in a variety of tricks to work around the ceiling when it was hard against it in 1953, 1957, and 1958.

Of course, when push came to shove Congress raised the ceiling in each case.

If our political masters and commentariat can be forgiven for neglecting the political tactics of more than a half century ago, it is harder to understand why they have failed to recall more recent jockeying.  Congresses rejected debt ceiling increases during the administrations of Lyndon Johnson, Gerald Ford, Jimmy Carter, Ronald Reagan, and Bill Clinton, in many cases leading to funding disruptions.

The debt ceiling showdown from 1996 presents a rhyme especially suited to our own moment.  Republicans, determined to lower federal spending, said that the Democratic President could only have a higher debt ceiling if he agreed to significant cuts in programs dear to the Democratic base.  When they passed a law that would enact these changes, the President responded with a veto and a demand for a clean debt ceiling increase.

Comparing the pronouncements of then-Treasury Secretary Robert Rubin, President Clinton, and various congressional Republicans to their 2013 counterparts produces an eerie sense of déjà vu—they are often difficult to distinguish.  So, too, are the critical analyses from the press.  Then, as now, there were accusations of blackmail, pseudo-crisis, and political charades, and grave pronouncements about how American government would be irreparably harmed if the president negotiated in exchange for the necessary increase.

As the date when Treasury’s maneuvers would be exhausted approached, Rubin increasingly emphasized the possibility that social security checks would be missed.  Clinton said Republicans should “stop playing politics with America’s good name,” to which they responded with very short-term bills pushing off the day of reckoning for several months and taking steps to ensure that Social Security recipients would not be left in the lurch.  In response to Rubin’s shiftiness about the consequences of reaching various dates, some Republicans called for the Treasury Secretary’s impeachment.

Of course, when push came to shove Congress raised the ceiling.  In this case, Republicans won minimal concessions from the president, but saved face by dubbing the package the “Contract With America Advancement Act” and including in it the line-item veto—a bold proposal on which the president agreed with them entirely.

This ending is hardly the stuff of great poetry, but we should hope (and probably expect) our current showdown to follow a similar course, with the White House’s “no negotiating” position giving way to some minor concessions.

One might argue that the near-absence of this episode from our current debate is heartening: seventeen years from now, in 2030, there’s a good chance that the shenanigans of 2013 won’t seem much worth remembering.

In another way, however, the inability to absorb or retain the lessons of 1996 is quite depressing: rather than institutional learning, we have institutional forgetfulness enabling a recurrence of ugly motifs.  Though a new generation has come onto the political scene, it hardly seems too much to ask our current leaders to remember the lessons of the 104th Congress; John Boehner was the Republican Conference Chairman in the House at the time.  To his credit, then-Speaker Newt Gingrich (R-Ga.) seems to have drawn the right lesson from his experience, advising Republicans that the issue is a “dead loser” for them.

Repeating this dysfunctional process over and over, with the expectation that it will somehow deliver fiscal responsibility and low spending that would otherwise be unattainable, is lunacy.  Legislators should permanently replace the debt ceiling and turn their attention to achieving workable budget compromises through the regular order—which should itself be reformed if necessary.  If they instead insist on treating the debt ceiling as if it were a historical revelation, they have only themselves to blame when it delivers its predictable lack of results.

Wallach is a fellow in Governance Studies at the Brookings Institution and his current research focuses on institutional aspects of fiscal policy and regulation, including financial regulation and climate change policy, as well as the legal aspects of the recent financial crisis.