The GOP majority in the House is poised to move ahead with a vote on a no-strings-attached $2.4 trillion increase of the federal borrowing limit next week. Treasury Department officials have been warning Congress for months that the government is coming dangerously close to scraping up against the debt ceiling, risking market catastrophe or even U.S. default. But congressional action upping the limit is wildly unpopular and the basic mechanism of raising the limit, used many times in recent decades, has become mired in the larger Washington conversation on deficits. While the upcoming “clean” vote is actually designed to fail, it might be exactly what the debt ceiling debate needs.
Members of the Republican leadership are assuring reporters that the symbolic measure won’t receive a single vote of support from their caucus — they’re even using a procedural tool to require a 2/3rds majority for passage. The reason they’re bringing it to the floor is to try to prove to Democratic negotiators that their demand for increasing the debt ceiling without conditional spending cuts is a non-starter. The urgency of making that point might be questionable — President Obama has already acknowledged compromise will be necessary, even if his Treasury Secretary has continued to make the case for an unconditional vote — but it’s certainly possible that the vote will resign some Democrats to making concessions at a later date.
But voting down the clean debt limit increase actually serves a much more important purpose, one which will ultimately make passing a final deal easier. Every Republican in the House will have a symbolic protest vote against increasing the borrowing limit on their record, an important credential for any politician hoping to survive another campaign season in even a slightly conservative district. Raising the debt ceiling is so unpopular in the broader public, not to mention downright heretical among Tea Partyers (think TARP), that a vote against it may be the only way to ward off primary trouble. Back in April, budget expert Stan Collender predicted that both the House and Senate would need to hold at least one failed vote on the debt limit just to get it out of their systems. Once that’s out of the way, voting for a compromise may not feel as politically risky.
There are, of course, other risks. Wall Street’s great fear is that any vote against raising the debt ceiling, even a symbolic one, will send the financial markets into panicked hysterics. That’s why usually conservative big business types have been begging Republicans to drop their preconditions and raise the ceiling. While their warnings have been dire, it’s not clear how much the failed vote will really do. When Standard & Poor’s, citing short-term political gridlock, issued a dismal report on the U.S.’s credit outlook, the bond market yawned. Politicians on both sides of the aisle have been telling anyone on Wall Street who will listen that there’s no doubt a deal will get done.
The urgency of raising the debt ceiling by August, when Treasury predicts the government will run out of options and begin missing payments, is still very real. If the markets shrug off Republicans’ symbolic vote against the clean version next week, it’s unlikely to convince anyone that it’s not worth doing at all. However, if the vote does spook Wall Street and markets take a dive, it may convince holdouts that the time for scoring ideological points is over. Whatever happens, the failure of an unconditional vote to raise the debt ceiling has begun to look like one of the key milestones on the way to a final deal. Better to get it out of the way now than in late July when the clock will be ticking down and everyone involved will be on edge.