The Quick and Dirty on the Debt Ceiling Portion of the Budget Deal

There seems to be a fair bit of confusion out there as to what exactly the debt ceiling portion of the Republican capitulation means. We all know the debt ceiling has been raised "until" February 7, but what does that mean, exactly? And what happens to future debt ceiling increases as a result of the Continuing Appropriations Act, 2014?

The confusion is understandable. Up until recently, the way debt ceiling increases have worked is Congress would set a dollar amount for the ceiling (not a date), and whenever the Treasury would run up against it, they would ask Congress for new borrowing authority, at which point Congress would simply raise that dollar amount. That changed earlier in the year with the No Budget, No Pay Act, used to punt Congress' responsibility to actually raise the dollar amount of the debt limit, instead simply suspending it, allowing the Treasury to borrow the needed money until May 18, 2013.

Since May 19, 2013, the Treasury was no longer allowed to borrow more, but the Department instituted certain extraordinary measures that combined with higher revenue to hold off the drop-dead date until October 17.

In the new budget deal the president just signed, Congress punts again. Here's how the relevant portion of the new law reads:

(1) IN GENERAL.—Section 3101(b) of title 31, United States Code, shall not apply for the period beginning on the date on which the President submits to Congress a certification under subsection (b) and ending on February 7, 2014.

SPECIAL RULE RELATING TO OBLIGATIONS ISSUED DURING SUSPENSION PERIOD.—Effective February 8, 2014, the limitation in section 3101(b) of title 31, United States Code, as increased by section 3101A of such title and section 2 of the No Budget, No Pay Act of 2013 (31 U.S.C. 3101 note), is increased to the extent that—

(A) the face amount of obligations issued under chapter 31 of such title and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) outstanding on February 8, 2014, exceeds

(B) the face amount of such obligations outstanding on the date of enactment of this Act.
What all that legal mumbo jumbo means in plain English is that the debt limit is suspended until February 7, 2014, and then increased on the following day to whatever the actual debt is at the end of that day on February 7. The way it does so is by extending the No Budget, No Pay Act's May 18, 2013 date to February 7, 2014. The No Budget, No Pay Act made for a one-time suspension, and since this deal just extends the date in that Act, it too is a one-time deal, ending on February 7.

That method of punting on the debt limit - by surrendering the authority to raise the dollar amount of the debt limit to the president and the executive branch and giving them a deadline by which to do so - is commonly known as the McConnell method, after the Senate Minority Leader, who thought up this complex method.

The president did not get Congress to give permanent consent to the McConnell method. However, what the Republicans wanted this time - and they absolutely did not get - was to prevent the Treasury from using extraordinary methods to put off the day on which catastrophe would occur, as the Treasury did this time. The Republicans would have much preferred to separate the government shutdown fight from the debt ceiling fight, the combination of which this time left them with no option but total and utter capitulation. They would have much liked to keep the shutdown going without the threat of the debt ceiling doom looming.

They wanted two leverages, but the convergence of the two leverages gave them the worse beating in the polls in polling history. So, they wanted to avoid this humiliation again next time, should they choose to again use these "leverages." They didn't get it. They got nothing.

It stands to reason that Congress now has a real impetus to get to the budget negotiations and work out a grand bargain. Republicans should want to avoid a repeat of the past two weeks at all costs (which is what the January 15 - February 7 timeline between the end of the Continuing Resolution and the debt limit increase sets up), and Democrats do want to avoid the next round of harsh sequestration cuts. It stands to reason that Republicans in Congress aren't so dimwitted that they will want this again early in an election year.

It stands to reason. But only insofar as reason prevails. If reason fails, as it seems it so often does, there's no telling what will happen.

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