02.08.2018 0

If the GOP Congress is going to raise the debt ceiling again, it should finally fix it to preserve President Trump’s art of the deal

By Robert Romano

Senate leaders have reached a bipartisan agreement on the 2018 budget that provides another six weeks of funding for the federal government.

It gets there by ending the remainder of budget sequestration, a remnant of the 2011 debt ceiling deal, increasing defense spending by $160 billion and non-defense spending by $131 billion the next two years.

As a result, one outcome for certain is there is going to be another major increase in the national debt, now nearly $20.5 trillion, without any major reforms to rein in future spending.

And now there is talk of adding an increase to the debt ceiling to the legislation as well, which Sen. Roy Blunt (R-Mo.) suggested would be extended until March 2019.

Article I is only as good as the Congress we elect. The reality the nation’s fiscal house faces is the only way to get 60 votes to increase defense spending, a top Trump administration priority, is to get 60 votes to increase non-defense spending, and Republicans still lack the votes to go nuclear and eliminate the filibuster on appropriations bills.

Lacking leverage or a means of resolution, these are the types of deals that will be produced, and have been produced in Washington, D.C. since the 1980s, when spending on both sides of the ledger increased and the debt exploded.

If there is a silver lining, it is that the proposal includes the debt ceiling to the deal, removing it from discussions on the final omnibus spending bill for the remainder of the fiscal year.

Meaning President Donald Trump and Congress would get another vehicle to pass preferred policy riders that could include items such as the President’s plan to build a southern border wall — without Democrats threatening default on the debt if Republicans don’t cave into their wishes for DACA amnesty in return for nothing.

That way, if and when there is another partial government shutdown in six weeks, the debt ceiling storm cloud will not be a factor used to force Republicans to accept a bad deal. Tactically, this makes sense from a negotiating perspective.

Still, another debt ceiling increase without any real reform to rein in spending over the longer term is far from ideal. If it must be increased, it should be with a promise that the debt limit can no longer be used to bully lawmakers into supporting massive increases in spending.

How to get there? Debt prioritization should be included with any new increase of the debt ceiling. It would guarantee that when the debt ceiling is reached, and extraordinary measures by the U.S. Treasury to maintain it have run out, that interest payments on the debt would be paid first out of existing revenue. After that, things like Social Security, Medicare, Medicaid, the military and veterans’ benefits would be prioritized. And so forth.

This would guarantee by law that there could never be a default, because existing revenue will always go to servicing the debt first.

Then, the next time the debt ceiling comes up, in 2019, we can have a real discussion about the future spending — and debt — without the Washington, D.C. establishment using the threat of default to maintain the status quo of ever-increasing spending.

President Trump understands leverage. In his book, “The Art of the Deal,” he wrote it is important to “use your leverage.” He wrote, “The best thing you can do is deal from strength, and leverage is the biggest strength you can have. Leverage is having something the other guy wants. Or better yet, needs. Or best of all, simply can’t do without.”

Trump adds, “Leverage: don’t make deals without it.”

Without real reform to the debt ceiling, it will continue to be not a mechanism that limits how much the government can borrow, but one that limits how much Congress can cut spending. To get to real spending cuts and a better deal for taxpayers, President Trump and Congress need real leverage. Besides ending the filibuster on spending bills, fixing the debt ceiling to take default off the table would do that.

Robert Romano is the Vice President of Public Policy at Americans for Limited Government.

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