- [Narrator] If it seems like the US
is constantly about to hit the debt limit,
also known as the debt ceiling, it's because it is.
- It's kind of like the horror film
that Hollywood keeps making sequels of,
even though no one liked the first one,
- [Narrator] Every few years or sometimes months,
Congress needs to vote to raise it
and they will need to do it again some time
in 2023 when Congress will look like this,
a Republican-held House and a Democratic-held Senate
with a Democrat in the White House.
And Republicans plan on using the debt ceiling
as leverage to negotiate spending cuts.
- The debt ceiling needs to be lifted.
But wouldn't it be a normal thing
if we're $31 trillion in debt
not to just give a blank check?
- [Narrator] So while Congress still looks like this,
Democrats are looking to act on the debt ceiling
so it's not something Republicans can use next year.
Here are three things they might do
in that lame-duck session.
But first, a brief history lesson
from what happened another time Congress looked like this.
The debt limit was raised many times
through recent history without much debate
until 2011 when Republicans decided to use it
as a bargaining chip to negotiate for more spending cuts.
- The American people will not accept an increase
in the debt limit
without significant spending cuts and reforms.
- [Narrator] The three sides debated
as the US got closer and closer to defaulting until.
- [Reporter 1] Congressional leaders reached a deal
with the president.
- [Reporter 2] Just one day before Uncle Sam
hit his credit limit.
- [Narrator] The US didn't default,
but the country's perfect AAA rating
was downgraded by S&P in part because of the fight.
- We're no longer the gold standard
as it relates to the world's economy.
- Longer term, we may see a rise in borrowing costs.
- If history repeats itself,
that is a scary scenario for this government.
- The US can't default on its debt.
That would have huge implications for the economy worldwide.
Even just getting close
to the debt limit can cause big problems for the economy.
- [Narrator] So to avoid a fight next year,
Democrats this year have three options.
The first is to just get rid of the debt limit altogether.
The US is one of two countries
that even have one in the first place,
and there's already legislation introduced to make it
like all these other countries.
So the Treasury could just take on
as much debt as it needs to pay for spending
that Congress already voted for.
Treasury Secretary Janet Yellen was asked last year
if she'd support the repeal.
- Yes, I would.
I believe it's very destructive to put the president
and myself, the Treasury Secretary,
in a situation where we might be unable
to pay the bills that result from those past decisions.
- [Narrator] But Biden says he wouldn't sign it.
- You mean just say we don't have a debt limit?
- [Reporter 3] No debt limit.
- No.
- [Narrator] So that's the least likely possibility.
The second is to just raise the debt limit so high
it's not really a problem.
That's what the other country
with a debt limit, Denmark, does.
Its debt would have to quadruple to reach its current limit.
The likely plan wouldn't be to raise the US's that high
but just enough to remove it
as something that would need to be debated in 2023.
- It's not due till next year
but the Democrats could pass something potentially
with Republican votes also
in the Senate that would raise it.
So we wouldn't have to worry about it say till 2024, 2025.
- [Narrator] But the most likely plan
is to restructure the way the debt ceiling is raised
in the first place and make it not Congress's problem.
The idea originates from that 2011 battle.
- It was an idea that was brought forward
by now Senate Minority Leader Mitch McConnell
who at the time was looking
for ways to help his members avoid having to vote
for the debt ceiling,
but give them a way to vote against it.
- [Narrator] Currently, a majority in the House
and the Senate have to vote
for raising the debt ceiling and then it's signed
or vetoed by the president, like most bills.
But members of Congress, especially Republicans,
don't like having to vote for raising the debt ceiling.
So what several bipartisan plans would do
is essentially reverse this.
It would give the executive branch,
so the president or even the treasury secretary
the authority to raise the debt limit
and Congress could pass a joint resolution of disapproval.
- Basically, Congress instead
of voting to affirmatively raise the debt ceiling,
members of Congress could vote basically
against raising the debt ceiling.
- [Narrator] But to actually override the executive branch,
they would need a 2/3 majority vote.
However, not everyone wants to take the debate away
from Congress simply
because it's crises that make Congress actually
get things done.
- We find ourselves at the edge of cliffs a lot in Congress
and that seems to be one
of the only motivators to get people to make concessions
and reach agreements.
But on the debt ceiling, that is a very high-risk strategy.
- [Narrator] Many Republicans want that high-risk strategy
to get spending cuts in other measures they worry
they won't get under a Democratic president.
- Republicans have tried to work with,
reach across the aisle
and have been shut out of many of those conversations.
If we could do that, then we wouldn't need to threaten,
use the threat of the debt ceiling as a negotiating tool.
- There are definitely divisions
within the Republican Party about how they see that.
Some of them really want it,
want to go to the brink and force these changes
that they really believe are important,
and others don't think we should be using
the debt ceiling that way
and would rather just take care of it.
Maybe even would rather Democrats take care of it
in the lame-duck before they have to worry
about it next year in their majority.
- [Narrator] So Democrats have about two months to decide
on one of these paths
and potentially gain Republican support for it.
Otherwise, come 2023,
we'll likely see an epic debt limit debate again.
(pensive music)