Democrats are making a mistake on the debt limit

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An earlier version of this article contained an incorrect byline. The article was written solely by Jonathan Bernstein of Bloomberg Opinion.

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Fresh off an unexpectedly resilient performance in the midterms, the Democrats appear to be bungling things right off the block by making a major political miscalculation on how to handle the debt ceiling.

Democratic leaders have signaled that they don't intend to address the borrowing limit in the current lame-duck session of Congress, when their majorities in the House and the Senate would theoretically give them a shot at raising or even eliminating the cap entirely without the help of Republican votes.

Democrats also seem to have convinced themselves that should the issue come to a head in early 2023, pushing the nation once again to the brink of a default and economic crisis, Republicans will take the blame.

"Although there is grave risk to the economy, the gun is in Republicans' hands," a Biden adviser told Politico last week. "And there is little question as to who will get blamed for this."

If there is a debt crisis or, even worse, a government default caused by breaching the borrowing cap, the blame should indeed fall on Republicans. But Democrats are kidding themselves if they think that they won't be held responsible for the eventual economic fallout.

It's not that Republicans actually oppose raising the limit, a superfluous and unnecessary law that only allows the Treasury to borrow money Congress has already obligated it to borrow. (See note 1, below.) But Republicans believe that they can withhold their votes in order to extract concessions on yet-to-be-revealed policy goals. And they're willing to risk creating havoc in financial markets and undermining faith in U.S. credit in the process. It's the political equivalent of a bratty kid threatening to hold his breath until he turns blue.

The economic mayhem that would likely result from a debt crisis should spur Democrats to do whatever it takes to raise the limit now. Ideally, they would jettison the cap entirely so that we could bring an end to these showdowns, which do no good for anyone.

But doing so would likely involve using the budget reconciliation process in the Senate to avoid a Republican filibuster and would require the support of Sen. Joe Manchin of West Virginia. The White House might not have the appetite or the ability to secure his support.

Manchin is facing a potentially tough re-election battle in 2024, so he has strong reasons for preferring bipartisan solutions when they are available. But he is making a mistake: He probably wouldn't like any deal that Republicans offered. If Manchin can't be won over, Democrats simply won't have the votes.

Whatever voters might claim they feel about who is responsible, if the economy tanks, Biden will take the blame. We just had a perfect example of how this works. After Russia's invasion of Ukraine, polling indicated that voters would blame Russia, not Biden, if gasoline prices jumped. Indeed, a solid majority of voters said that they were willing to pay more at the pump if that's what it took to push back against Russian President Vladimir Putin.

Yet as soon as gas prices surged, so did Biden's disapproval numbers.

If the U.S. did default on its debt, there is little doubt that a majority of voters, and perhaps an overwhelming majority, would tell pollsters that Republicans in Congress were primarily at fault. But if the economy is damaged, Biden's standing will suffer. That might not be fair, but that's the way things work.

And when November 2024 rolls around, voters won't let Democrats off the hook. That should be strong incentive for Biden and congressional Democrats to put an end to debt limit dramas right now. (See note 2, below.) As a side benefit, they can know that they are making good public policy by doing so.

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(2) Almost right now. I doubt that a debt limit vote would make any difference in the Georgia Senate runoff, but the rules that Democrats would have to use would allow Republicans to offer amendments aimed at generating tough votes for Senator Raphael Warnock, and so it makes sense to wait until after the Dec. 6 vote. For everyone else, the marginal pain of a tough vote two years (or more) before they are on the ballot again isn't a big deal.