Conservatives are optimistic that an aggressive deal on the debt ceiling can be reached under President Trump and the Republican Congress. But signs are starting to emerge that the issue could split Republicans just as they were split on the healthcare bill in March, which could force GOP leaders to work with Democrats and lead to a less-than-ideal debt ceiling deal by the fall.
Like all the other big issues facing Republicans this year, the debt ceiling debate could quickly turn from an opportunity to showcase party unity into another stark example of party division.
On paper, the debt ceiling should be an easy-to-accomplish unifying event for Republicans: GOP leaders support less spending; Trump promised during the campaign to cut spending and reduce the $20 trillion national debt; and he named deficit hawk Mick Mulvaney as his budget director.
Conservatives take all of that, plus Trump’s budget plan to cut domestic spending while boosting defense spending, as positive signs that Trump would lead the GOP on a more sustainable fiscal path.
“The first signal from the White House was positive,” Rep. Jim Jordan, a Republican member of the conservative House Freedom Caucus, told the Washington Examiner last week. “That’s exactly where Republicans and conservatives are. We think our national defense is of paramount importance, and that’s where we’re supposed to spend your tax dollar.”
A former HFC member, Rep. Tom McClintock, R-Calif., said he also sees a real chance under Trump to make sure the debt ceiling becomes a real tool to manage federal spending.
“I’ve said many times that the debt limit exists for a simple reason: to assure that public debt isn’t recklessly piled up without acknowledging and addressing the spending patterns that are causing it,” McClintock told the Washington Examiner. “For the first time in 16 years, we have a president willing to do so, as evidenced by the appointment of Mick Mulvaney to the OMB and the administration’s recently released budget.”
But after the split over healthcare, some are already predicting that Republicans in Congress won’t see eye-to-eye on how to get the job done. Rep. Tom Cole, R-Okla., who has been entrusted by GOP leaders with seats on the House Appropriations, Budget and Rules committees, said the logical answer could be to work with Democrats to ensure the debt ceiling is raised this year.
“I think it’s going to be more of a challenge than people think,” Cole told the Washington Examiner. “We have a number of members that simply won’t vote for a debt ceiling increase.
“If we couldn’t get 216 votes to repeal Obamacare, count me as skeptical that there’s 216 Republicans that will vote to increase the debt ceiling,” he added.
Cole said that while he’s personally fine with new spending restraints, the expected split within the GOP means it’s probably time to “deal with Democrats.” That means finding ways to get Democrats to support the package, and that could mean less aggressive spending restraints than what the HFC can support.
That would mean fewer votes from the HFC, but plenty of additional votes from the Democratic Party to allow its passage.
“I think repeal and replace should teach you: If you’re counting on 216 Republican votes to either pass your 17 spending bills at the current levels, or raise the debt ceiling, then that’s not likely to happen,” Cole predicted. “So you either better open negotiations with the Democrats, or at least be talking about it among Republicans to get a feel for where you are.”
Congress is still expected to have several months to sort when and how to raise the debt ceiling. But the possibility of a split threatens to create more disruption in the GOP and complicate efforts to resolve the matter, which everyone knew was coming nearly two years ago.
In 2015, Congress suspended the ceiling, which let the government borrow as much as it wanted through March 15, 2017. On that date, the total national debt was $19.846 trillion, and the government can’t exceed that limit without approval from Congress.
In the past, that has meant leverage for fiscal conservatives. Anyone wanting support from deficit hawks need only include some kind of spending restraint to get those votes.
Policy experts who follow the issue, such as Romina Boccia, the Grover M. Hermann Research Fellow at Heritage Foundation, say there are plenty of ways to add conservative touches to the first debt ceiling hike under Trump.
One idea is to stop suspending the debt ceiling as was done under President Obama, and instead agree to a specific debt limit, Boccia said. That would avoid more lengthy periods in which the debt is allowed to grow as quickly as Washington can borrow and spend.
Spending caps, like the sequester caps from the 2011 Budget Control Act that many in both parties have come to hate, are another necessary ingredient for conservatives.
“Congress should build on the successes of the Budget Control Act with a broader spending cap that motivates deliberate reforms of the key drivers of spending and debt,” Boccia said. She called for putting “all government programs on the table” when it comes to creating new caps.
But Boccia admits that even Republicans have shied away from these caps, and many have argued that the spending limits are hurting the military.
“This is always something that’s been very difficult for Republicans who claim to be fiscally conservative, but when the rubber hits the road, they’re reluctant to take steps to control the debt,” she said.
The Trump administration itself may have indirectly created a new hurdle to embracing spending caps. The administration’s budget proposal called for billions in new defense spending above current spending caps, a plan that is likely to prompt Democrats to match that with calls for more non-defense spending.
In other words, instead of setting expectations of lower spending, Trump’s budget might instead spark another bidding war in the other direction. What’s more, Trump has so far avoided entitlement reforms that experts say must be part of any plan to cut the annual budget deficit and the accumulated national debt.
“We still reserve judgment to see what he does in May, but he’s definitely limiting his options,” said Ed Lorenzen, a senior adviser for the bipartisan Committee for a Responsible Federal Budget. Trump’s fully formed budget is expected to be released next month.
The Treasury Department has the ability to keep the government from exceeding the debt ceiling for several months, by limiting the issuance of certain kinds of debt and otherwise juggling the books, known as “extraordinary measures.” That’s why there was no immediate crisis when the debt ceiling was hit last month: Congress has several months to figure it out.
But few hints have been dropped by Republicans at any level over how it might be resolved. In March, Treasury Secretary Steve Mnuchin asked Congress to quickly raise the debt ceiling, and made no mention of conditioning an increase on spending restraints.
“[H]onoring the full faith and credit of our outstanding debt is a critical commitment,” he wrote. “I encourage Congress to raise the debt limit at the first opportunity so that we can proceed with our joint priorities.”
A Treasury official said that letter was a call for a specific debt ceiling, but Republicans in Congress say it’s too early to talk about whether that could happen again, or whether another suspension of the debt ceiling is coming.
Senate Majority Leader Mitch McConnell, R-Ky., issued a similarly vague intent to comply with Mnuchin’s request, and Senate aides said no details have been worked out yet.
“We’ll be talking to the secretary of the Treasury about timing, but obviously we will raise the debt ceiling,” McConnell said in March after Mnuchin’s letter.
However it gets done, members such as Jordan of the HFC say there shouldn’t be any reason to work with Democrats. He said conservative “guideposts” have always been to allow a debt ceiling hike in the context of spending restraints, and said American voters back conservatives on that goal.
“We should work with Republicans, and if Democrats want to help us do what we told the American people, that’s the model we need to follow,” he said.
“It’s gotta be real, it can’t be pretend, ‘oh, we’re going to fix it in year nine of a 10-year budget, but we’re going to keep spending,’ ” Jordan added. “It’s gotta be real.”
Regardless of how Republicans collect votes, the process is likely to end in the fall with some kind of increase in the ceiling, which will put the U.S. on the path toward a $21 trillion national debt. And that has some complaining that the ceiling is still not functioning as a warning system to get Congress to trim spending, and instead is a simple measurement of the nation’s ever-increasing debt.
“The primary mechanism that Congress has used to control the level of federal debt in the past is the debt ceiling limit,” David Walker, the former chief of the Government Accountability Office under Presidents Clinton and George W. Bush, told a Senate panel last week.
“While this mechanism is the only direct debt speed brake the Congress has, it has not proven to be effective in limiting the growth of federal debt, forcing a reconsideration of proper role of the federal government, including the need to reform mandatory spending programs and tax expenditures,” he added. “Clearly, the federal government has lost control of its finances.”
