Why Does Trump Want the Debt Ceiling Raised Now?
On Tuesday, Professor Buchanan wrote on this blog that he and I had "found one silver lining in the current political cataclysm, and that is that we will almost surely never again have reason to write about the debt ceiling . . . ." Although I agreed (as I usually do) with nearly everything else he wrote there, I'm going to prove him wrong on this one, because the debt ceiling is back in the news. Yesterday, the following "statement from President Donald J. Trump and Vice President-Elect JD Vance" was posted on Vance's X account:
The most foolish and inept thing ever done by Congressional Republicans was allowing our country to hit the debt ceiling in 2025. It was a mistake and is now something that must be addressed. . . . Increasing the debt ceiling is not great but we’d rather do it on Biden’s watch. If Democrats won’t cooperate on the debt ceiling now, what makes anyone think they would do it in June during our administration? Let’s have this debate now. And we should pass a streamlined spending bill that doesn’t give Chuck Schumer and the Democrats everything they want.
The ellipsis indicates my omission of some nonsense about Liz Cheney, and the statement continued after what I've quoted above with some further nonsense, but I want to focus only on the foregoing language, concerning the debt ceiling.
To begin, notice that, according to Trump and Vance, the "foolish and inept thing" was not the fact that Congress suspended the debt ceiling only until January 2025. (The June date presumably reflects a projection that the so-called "extraordinary measures" which we can expect the Treasury Department to employ will have been exhausted by then.) That was indeed foolish. Congress should have suspended it indefinitely, raised it so high that it cannot be reached as a practical matter for centuries, or, best of all, repealed it, because--as Professor Buchanan and I have explained ad infinitum--the debt ceiling is a wholly unnecessary statute that does not constrain debt but can only cause mischief. But no, that, according to Trump and Vance, is not what was foolish. The foolish (and inept) thing "was allowing our country to hit the debt ceiling in 2025."
Yet, in 2023 (when the issue last came to a head), the only way that Congress could have avoided hitting the debt ceiling was by raising, suspending, or repealing it. The implicit suggestion of Trump and Vance, however, is that Congress could have avoided hitting the ceiling by passing laws that led the government to take in as much money as it was spending, including spending on debt service. During Trump's first term, however, the government never came close to running a surplus. Even before the COVID-19 pandemic led to (justified) increased spending, the national debt grew each year of the first Trump administration, thanks in no small part to the tax cuts (mostly for the wealthy) that he signed into law.
To be clear, we at DoL don't think that increasing the national debt is necessarily bad. More often than not, the government has erred by spending too little (as in the aftermath of the 2008 financial crisis) or focusing too soon on deficit reduction (as manifested by the disastrous 1937 double-dip due to FDR's premature pivot). But if one is going to be a deficit and debt hawk, one should start with realistic numbers. Even if Elon Musk and Vivek Ramaswamy get nearly all of the cruel cuts to non-military discretionary spending they want, they will not generate enough savings on the expenditure side to balance the budget and thus obviate the need to raise the debt ceiling.
And Trump and Vance know it. That's why they acknowledge that a failure to raise (or suspend or repeal) the debt ceiling now will necessitate raising (or suspending or repealing) it at some point in 2025, though not necessarily in June. The debt ceiling comes back into effect in mid-January. Extraordinary measures typically generate only about three months of extra time, which would take us to mid-April, not June.
But let's suppose they are right about June. If so, the incoming Trump administration would have four-and-a-half to five months to cut spending enough to balance the budget and therefore necessitate no new borrowing authority. Presumably, with a compliant House and Senate, they could get any package of spending cuts they wanted. (They might be able to get deficit-narrowing tax increases too, but that's certainly not on the agenda for a Republican administration.) The fact that Trump and Vance recognize the need to raise (or suspend or repeal) the debt ceiling before extraordinary measures run out shows that they also recognize that their antecedent claim--the claim that Congress was foolish and inept to continue to run up debt--was self-serving baloney. They too will run up debt.
That context seemingly explains the current moment. During his first term, Trump had no qualms about raising the debt ceiling. In 2018 and again in 2019, he signed bills that suspended it (which is the equivalent of raising it, because when it awakens, it resets to the new level of debt). However, during last year's nearly disastrous negotiations, Trump opposed the deal that former Speaker Kevin McCarthy struck with President Biden to suspend the debt ceiling--ostensibly because he wanted fiscal reforms but in reality for the same reason he killed the border security bill that Republicans had negotiated: to prevent President Biden from winning a political victory.
What we have here appears to be pure politics. Republicans have spent so much time over the last 13 years (since the first debt ceiling crisis occasioned by Republican intransigence in 2011) trying to confuse the public (and in the process, sometimes confusing themselves) into believing that raising the debt ceiling is itself a form of profligacy, that it would be awkward for them to raise or suspend it next year. Thus, Trump and Vance want the ceiling raised or suspended on Biden's watch.
Or so it might seem. The difficulty with the foregoing analysis is its assumption that Trump would pay any political price for further flip-flopping on the debt ceiling. If Trump signs a bill suspending the debt ceiling in 2025 without obtaining spending cuts or other measures that make a substantial difference in the path of government debt, the fact that this will show his prior opposition to have been hypocritical will matter not a whit to him, nor to the compliant press, nor to his supporters. If Trump tells his supporters we have always been at war with Eastasia, they will believe him. And much of the media will report what he said, while dutifully noting that Democrats say otherwise, but not actually reporting on reality.
Because Trump is beyond being shamed by exposure as a hypocrite, we need some other explanation for his willingness to risk a government shutdown for which he could be blamed as the price of getting a debt ceiling bill now rather than once he's president. One possibility is that he doesn't believe he can count on the most rabid House Republicans--the ones who actually appear to believe that defaulting wouldn't be disastrous--to vote for a debt ceiling increase or suspension ever. If so, he needs support from Democrats, and he probably assumes that Democrats will be more willing to vote for a debt ceiling suspension with Biden in the White House than when Trump returns.
But that doesn't quite fly either. If the debt ceiling is not raised or suspended before extraordinary measures run out in 2025, Trump will be president during the ensuing disaster. Biden will be out of office before the disaster, so Democrats have no special reason to think that they need to protect him by voting for a debt ceiling suspension or increase now. Meanwhile, because Democrats are unlikely to emulate Republicans by taking the global economy hostage, Trump probably can count on enough congressional Democratic support to increase or suspend the debt ceiling next year, even if the hardest-core economic ignoramuses in his own party refuse to vote to do so.
In the end, then, we have a mystery. It is difficult to identify a reason why Trump and Vance are insisting that the debt ceiling be increased or suspended now. Maybe he wants to saddle Biden with a government shutdown because he thinks the public will blame Biden for it, or if not Biden, then congressional Republicans, but not him while he awaits inauguration. Or maybe there is no coherent rationale. Maybe now, as so often in the past, Trump isn't playing three-dimensional chess; he's just eating the pieces.
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Postscript: This is probably my last blog post for 2024. Between now and my return early next year, I'll be busily grading exams and seminar papers. But there will be new content from my co-bloggers, or even from me, if there's breaking news I can't ignore. Stay tuned in any event, because we might also run some "classics" (i.e., reruns) on down days. Happy holidays to all.