At the meeting, Schumer seized on Trump’s question and floated the idea of eliminating the debt ceiling altogether, according to a person briefed on the discussion. Schumer and Pelosi resolved to talk through the possibility with their respective caucuses with an eye toward a final agreement in December, when Congress will next have to confront the debt limit and federal spending. “There are a lot of good reasons to do that,” Trump told reporters in the Oval Office, acknowledging that the era of debt-ceiling drama could be nearing an end.
News that the president might bargain away the debt ceiling entirely just after striking a smaller fiscal deal with Democrats ran into immediate resistance from Republicans, many of whom would have found the suggestion laughable had it come from Obama. “No,” replied Speaker Paul Ryan at a Thursday morning press conference. “I think there’s a legitimate role for the power of the purse and Article 1 powers, and that’s something that we defend here.” Texas Senators Ted Cruz and John Cornyn reportedly offered similar sentiments.
Despite these initial protests, however, the debt-limit’s demise may only be a matter of time. Republican leaders stopped trying to extract concessions in exchange for lifting it late in Obama’s tenure, and now that they are in charge of both Congress and the White House, what leverage it held for them has disappeared completely. To the extent the debt ceiling remains a hostage, it now belongs equally to Democrats and to conservatives who can withhold votes to raise it.
Illustrating the new dynamic, it was Ryan and Senate Majority Leader Mitch McConnell who pushed for authorizing the equivalent of trillions more in borrowing than Democrats: They wanted the debt-ceiling increase to last 18 months, long enough to push the next vote in Congress until after the 2018 elections. Schumer and Pelosi offered only a three-month extension so they could come back and negotiate again, and Trump sided with them.
Indeed, when Ryan explained his rationale for opposing—initially—the Democrats’ proposal for a short-term debt ceiling hike, he couched it in terms of economic health and stability. “The longer the better, for the stability of the credit markets. That’s my strong opinion,” he said. “I’m worried about the credit markets, and doing this on a short-term basis... We can’t keep doing it that way.”
Under that line of reasoning, the best solution for guaranteeing market stability would be to do away with debt-limit votes entirely. Democrats like Pelosi point to the Constitution, interpreting its reference to “the full faith and credit” of the United States to mean that the Treasury has de facto authorization to borrow as needed to pay the nation’s bills. Under Democratic House majorities, Congress followed a procedure created by former Representative Richard Gephardt of Missouri in which the debt ceiling was automatically deemed to be increased with the passage of the budget. The thinking was that lawmakers would approve payments at the same time as they authorized spending.