How to Solve the Debt-Ceiling Crisis Forever

Photograph by Max Oppenheim/Getty Images

At its heart, the increasingly scary impasse over raising the $16.7 trillion debt ceiling is about House Speaker John Boehner’s determination to use the prospect of default as leverage to secure Republican policy victories and President Obama’s determination to avoid a precedent-setting submission to those demands that would severely weaken future presidents. There is, however, a potential solution that would not only avert a catastrophic default and let both sides save face, but would also eliminate such threats in the future.

Most of the history of past shutdowns and near-defaults dredged up to lend perspective to the current crisis focuses on how common these events were in the past. But for more than a decade, in the 1980s and early ’90s, the default threat was basically eliminated. The trick was doing away with the bizarre two-step process by which the U.S. government budgets and then spends money.

Quick civics refresher: First, Congress passes a budget resolution that determines how much will be spent. Then it raises the debt limit to allow for that spending. Why two steps? There is no good reason. It invites the widespread misperception, currently being fanned by Republicans (but also once fanned by one Senator Barack Obama), that the critical spending decisions come in Step Two, not Step One, and that refusing to raise the debt ceiling addresses them. It does not. But it does cause crises like the one we’re in now.

Back in 1979, the Democratic House Speaker, Tip O’Neill, handed the unhappy job of lining up votes for a debt-ceiling raise to Representative Richard Gephardt, then a young Democratic congressman from Missouri. Gephardt hated this, and, realizing he’d probably get stuck with it again, consulted the parliamentarian about whether the two votes could be combined. The parliamentarian said they could. Thereafter, whenever the House passed a budget resolution, the debt ceiling was “deemed” raised.

The “Gephardt Rule,” as it became known, lasted until 1995, when the new House Speaker, Newt Gingrich, fresh from the Republican triumph of the 1994 midterms, recognized the same thing that Tea Party Republicans recognize today: The threat of default could be used to extort Democratic concessions. Gingrich abolished the Gephardt Rule, and within the year the government had shut down.

The way out of the crisis for Boehner and Obama is to agree on a deal that allows a modest, face-saving concession to Boehner—medical-device tax repeal?—in exchange for reimposing the Gephardt Rule. True, Obama says he won’t negotiate over the debt ceiling. But his rationale is that doing so would fatally weaken future presidents, who’d be shaken down every time a debt-ceiling vote approached. If such votes were eliminated, Obama would have nothing to fear—and this damaging showdown could finally come to a close.

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