Democrats Take a Big Step Toward Protecting the Markets from Trump
The House is resurrecting a rule that would prevent a debt-ceiling breach.
With a new session of Congress comes a new set of congressional rules. One in particular, on its way to being implemented in the House, should cheer investors exhausted by market chaos and leery of President Trump’s unpredictability: Democrats are reimposing an arcane measure called the “Gephardt Rule,” which reduces the likelihood that debt-ceiling brinkmanship will tank markets, as it did in 2011 and 2013, when Republican threatened to force a default to extract policy concessions.
Trump’s norm-busting style and recent trashing of Federal Reserve chairman Jerome Powell have already raised fears that he might engineer his own debt-ceiling drama. As a Goldman Sachs note released in the early days of the current government shutdown pointed out: “The confusion and disorder surrounding this week’s spending debate suggest fiscal deadlines in 2019—including the debt limit deadline—could be more disruptive than they have been since the 2011-2013 period.”