Democrats consider eliminating debt ceiling as leverage in spending negotiations.

Congress Passes Fiscal Responsibility Act to Raise Debt Ceiling

Now, Democrats are considering ways to eliminate the debt limit entirely from spending talks.

Lawmakers approved the bipartisan deal earlier this week that allows Democrats to raise the debt ceiling while approving a number of government spending cuts proposed by Republicans. The deal meant that neither side got all that it wanted — a result of a divided government, party leaders said.

Eliminating the Debt Limit

The legislation is prompting Democrats in both chambers to consider ways to allow the president to raise the debt ceiling unilaterally if needed in order to remove one of Republicans’ largest pieces of leverage from future negotiations.

The debt ceiling was created by Congress in 1917 as a way to eliminate the need for daily financial management. In doing so, the debt limit gives the Treasury the authority to borrow up to a set amount determined by lawmakers. But because the United States regularly reports budget deficits, that amount must be continually raised in order to issue new debt and pay off the country’s bills.

Protect our CREDIT Act

Senate Democrats introduced legislation earlier this year that would do just that. Under the Protect our CREDIT Act, the president would be required to determine the amount of debt necessary for the upcoming fiscal year and propose a new debt limit based on the spending amount authorized by Congress.

• The legislation would raise the debt ceiling to whatever number the president proposes, unless Congress passes a joint resolution of disapproval that would require a new debt limit amount.
• If the federal debt comes within $250 billion of the proposed limit, the president would then be required to submit an explanation of what caused the additional debt and propose a new ceiling for the remainder of the fiscal year.

A similar idea was once proposed by Senate Minority Leader Mitch McConnell (R-KY) in 2011, which was later included in the Budget Control Act of 2011. Under that system, Congress could override the president’s debt ceiling increases with a resolution of disapproval — although those never garnered enough support in Congress, and the proposed increases were allowed to go into effect.

Reintroducing the Bill

Rep. Brendan Boyle (D-PA), ranking member on the House Budget Committee, said he plans to reintroduce a similar bill in the House sometime next week, according to the Wall Street Journal, citing support from several other House Democrats.

“Because we have been fixated on this issue for months and months, we are dramatically behind on all the rest of the legislative work that Congress has to get done,” he told the outlet.

It’s unclear whether such a proposal would pass through the Republican-led House, as several GOP members were adamant about keeping the debt ceiling a focal point of McCarthy and Biden’s negotiations. Additionally, some Democrats have expressed support for maintaining the current debt ceiling system, arguing it helps keep the government in check.