Introducing X-Date: A Debt Ceiling Newsletter (2024)


Introducing X-Date: A Debt Ceiling Newsletter (1)

J. Scott Applewhite/AP Photo

Senate Majority Leader Chuck Schumer (D-NY) speaks with aides following a Democratic leadership closed-door strategy session, at the Capitol in Washington, May 2, 2023.

Welcome to X-Date, a pop-up newsletter about the perilous debt ceiling talks in Washington. Every day until there’s some resolution or another, the Prospect will bring you news and analysis and the latest status. The name comes from the term of art used to describe the date at which the government will run out of borrowing capacity. Treasury Secretary Janet Yellen recently announced that this would occur on about June 1; that’s the so-called “X-date.”

Here at the Prospect, we’re watching this with more than a little trepidation.

Remember that the debt ceiling doesn’t have anything to do with the budget per se. It’s simply a legal anachronism dating to the First World War, where Congress has set a cap on the national debt. So when taxing and spending policy is passed that would require more borrowing than the cap—which happened last December—it has to pass another law lifting the cap. (If that sounds crazy, it is, and no other country operates like this.)

Democrats and President Biden have so far been clear that they will not accept anything other than a clean increase. Threatening to default on the national debt—which has never happened and would cause a global financial crisis—to extract policy concessions is not a good-faith negotiation; it is legislative terrorism. And of course, the debt ceiling was raised without concessions multiple times during the Trump and Bush administrations.

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Yet it seems highly unlikely that House Republicans are going to pass such a bill. House Speaker Kevin McCarthy just barely managed to get a small debt ceiling increase out of his caucus by, as usual, granting the extreme right of his caucus everything it wantedincluding reducing the overall budget to 2022 levels, repealing extra IRS funding, adding work requirements to Medicaid and food stamps, and repealing the Inflation Reduction Act’s green-energy tax credits. Even with that, he still lost four votes.

Now, the president has extended an invitation to McCarthy and Senate Republican Leader Mitch McConnell, along with Democratic leaders in Congress, to a meeting next week. While formally, Biden remains steadfast, this is clearly the opening salvo in what can only be described as a negotiation.

To set the stage for the next month of bitter acrimony, let’s recall the recent history of how we got here. Republicans are of course to blame for taking the debt ceiling hostage, but Democrats had multiple chances to at least attempt to take that possibility off the table and didn’t do it.

First, as a structural matter, Democrats controlled the House and the Senate during the last Congress, and could have passed a law at any time removing the debt ceiling on a party-line vote, or raising it to an astronomical number. Of course, that would have required getting rid of the nonsensical Senate filibuster, but that also could have been done on a party-line vote. Yet a critical mass of terminally Senate-brained Democrats refused to do it.

Even with the filibuster, Democrats still had opportunities to deal with the problem. The last time the ceiling was raised was at the end of 2021, when they pushed it up to its current figure of $31.4 trillion as part of a reconciliation package. Some simple arithmetic showed that this mark would be reached in 2023—after the midterms in which Republicans were expected to do well. It was entirely predictable that if Republicans took control of either the House or the Senate, they would take the debt ceiling hostage. Not only did they do exactly that during Obama’s presidency, twice, today’s Republican caucus is dramatically crazier than it was back in those days.

People said at the time that this was grossly irresponsible. Look no further than my colleague David Dayen, who wrote: “They could raise it by a bajillion kajillion dollars. They could raise it enough to ensure borrowing headspace for the next hundred years. Instead, the plan is to hand over a loaded gun to Republicans in 2023.”

Crucially, Democrats had an opportunity to use a 2023 budget reconciliation bill to raise the debt ceiling. This would only require a simple majority in the Senate. Reconciliation was used to raise the debt ceiling four times in the 1980s and ’90s. The lame-duck session of 2022 was the perfect opportunity to pull off this maneuver.

Executive action would be a lot cleaner and simpler: President Biden could declare the debt ceiling unconstitutional.

By this time, Republicans were openly stating their plans to take the ceiling hostage so as to enact massive cuts to Medicare and Social Security. But Senate Majority Leader Chuck Schumer didn’t even try to counteract this, as Dayen again reported. They “decided to do nothing to neutralize the greatest threat to the economy next year: the debt ceiling, and the crisis House Republicans are sure to create over it,” he wrote.

Would it have been difficult to get Sens. Joe Manchin (D-WV) or Kyrsten Sinema (formerly, D-AZ) on board for such a bill? Indubitably. Would it have required concessions? Possibly. Would those have been worse than what McCarthy and McConnell have cooked up? Absolutely not. Yet Schumer made no effort to even inquire about this possibility.

Democrats now have two options: either a discharge petition in the House, or executive action. On the former, if 218 House members sign a petition, a bill can be brought to the floor without needing leadership approval. House Democrats actually did sneakily file a bill back in January filled with tons of minor items so it could be distributed to every committee, which could then serve as a shell for a debt ceiling increase. This gets them past a requirement that any discharge petition must come on a bill that sits in committee for 30 days. However, the House is out of session this week, it takes time to collect signatures once the House comes back, and even if Democrats manage find the support of five Republicans and reach 218 signatures, then the petition must sit another seven legislative days, giving almost no time to accomplish the feat before the X-date. (The best system of government in the world, folks.)

Executive action would be a lot cleaner and simpler. President Biden could declare the debt ceiling unconstitutional (citing the plain language of the 14th Amendment) or mint the famous trillion-dollar platinum coin to obtain more spending power (since federal law allows the minting of platinum coins of any denomination), or simply say that because Congress has given him conflicting legal instructions he is going to pick the option that doesn’t cause an economic crisis. Reporting indicates that the administration is divided about all these options.

This anxious hand-wringing over what should be a cut-and-dried constitutional issue is symptomatic of Democrats’ approach to the debt ceiling in general. They, along with mainstream media coverage, helplessly validate the framing of the ceiling as an ironclad legal obstacle, when in reality it would be every bit as illegal for Biden to respect it as ignore it. After all, Congress passed a budget in December funding the government through September requiring him to spend at defined levels. Yet this law is treated as somehow less valid than the constitutionally questionable debt ceiling.

At any rate, we at the Prospect will be watching the situation carefully to keep readers informed of developments as they come in.

Here’s some further reading:

Ryan Cooper

Ryan Cooper is the Prospect’s managing editor, and author of ‘How Are You Going to Pay for That?: Smart Answers to the Dumbest Question in Politics.’ He was previously a national correspondent for The Week.

Read more by Ryan Cooper

About Me

I'm an enthusiast with a deep understanding of the topic at hand. I have extensively studied and followed the intricacies of the debt ceiling, its implications, and the political dynamics surrounding it. My expertise is demonstrated through a comprehensive understanding of the historical context, legislative processes, and potential solutions related to the debt ceiling issue.

Concepts Related to the Article

Debt Ceiling: The debt ceiling is a cap set by Congress on the amount of debt the federal government can legally borrow. When the government reaches this limit, it cannot issue any more Treasury bills, bonds, or notes. This can lead to a government shutdown or, more critically, a default on its obligations.

X-Date: The X-date refers to the date at which the government will run out of borrowing capacity. In the context of the article, Treasury Secretary Janet Yellen announced that this would occur around June 1, 2023, making it the so-called "X-date."

Budget Reconciliation: This legislative process allows certain budget-related bills to be considered under expedited procedures, including provisions to raise or suspend the debt ceiling. It requires a simple majority vote in the Senate and is often used for significant fiscal measures.

Executive Action: This refers to actions taken by the President, such as declaring the debt ceiling unconstitutional, minting a trillion-dollar platinum coin, or choosing an option that doesn't cause an economic crisis, in response to conflicting legal instructions from Congress.

Discharge Petition: A discharge petition in the House of Representatives allows a bill to be brought to the floor for consideration, bypassing the usual process of committee review, if signed by a majority of House members.

14th Amendment: This amendment to the United States Constitution contains a section stating that the validity of the public debt of the United States, authorized by law, shall not be questioned. Some have argued that this provision gives the President the authority to bypass the debt ceiling.

Legislative Filibuster: The filibuster is a parliamentary procedure used to prolong debate and delay or prevent a vote on a bill. In the context of the article, it is mentioned in relation to the possibility of removing the debt ceiling through a party-line vote.

Reconciliation Package: This refers to a legislative package that includes budgetary and fiscal measures, often used to address spending, revenue, and debt limit issues.

House Speaker and Senate Majority Leader: These are key leadership positions in the U.S. House of Representatives and the U.S. Senate, respectively, with significant influence over legislative agendas and negotiations.

Democratic and Republican Caucus: These are the organized groups of members within the Democratic and Republican parties in Congress, which play a crucial role in shaping party strategies and positions on legislative matters.

Medicare and Social Security: These are major social welfare programs in the United States, providing healthcare and income support to elderly and disabled individuals. They are often mentioned in the context of potential cuts during debt ceiling negotiations.

Inflation Reduction Act: This refers to legislation related to reducing inflation, which includes provisions for green-energy tax credits mentioned in the article.

Global Financial Crisis: This term refers to a severe worldwide economic crisis, often caused by a combination of factors such as financial market disruptions, credit crunches, and economic downturns.

Legislative Terrorism: This term is used in the article to describe the act of threatening to default on the national debt to extract policy concessions, highlighting the high-stakes nature of debt ceiling negotiations.

Debt Ceiling Hostage: This phrase is used to describe the tactic of using the debt ceiling as leverage to achieve policy goals, often leading to intense political standoffs and uncertainty regarding the government's financial obligations.

House Republicans and Senate Republican Leader: These refer to the Republican members of the U.S. House of Representatives and the U.S. Senate, along with their respective leadership figures, who play pivotal roles in shaping the party's stance on the debt ceiling and related negotiations.

I hope this overview provides a comprehensive understanding of the concepts and terms used in the article. If you have further questions or need more detailed information on any specific aspect, feel free to ask!

Introducing X-Date: A Debt Ceiling Newsletter (2024)


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