We are nearing the limit of the borrowing authority that Congress has given the federal government.
Almost everyone agrees that the debt ceiling needs to be raised.
Not even the flintiest conservative has advanced a plan for bringing the U.S. budget deficit to zero in the next few weeks.
And the consequences of hitting the debt limit seem highly likely to be disastrous — even coming near it in 2011 seems to have hurt the economy.
Ideally, Republicans and Democrats would agree to couple the increase in the debt ceiling with measures to address the underlying problem that keeps leading to increases: the mismatch between our spending commitments and revenue. The debt limit provides the only occasion on which Congress and the president have to take responsibility for the amount of debt their fiscal policies generate.
This spring, I outlined some ideas for reducing the dangers of hitting the debt ceiling, and some ideas for reducing long-term debt that might generate bipartisan consensus. Watch the news for a few minutes, and you can see that no such consensus has gelled. No serious attempt has even been made to create one.
Republicans, meanwhile, have adopted an unrealistic sense of how much of their policy agenda they can achieve by tying it to the debt limit. (An unrealistic sense of leverage seems to be a pattern with them this year.)
Many of them want to force President Barack Obama to make major changes to his health-care law, and in return give him nothing but the debt-limit increase.
There is no precedent for the satisfaction of such demands. Look back at every previous piece of legislation that raised the debt limit while also making changes to other government policies, and almost always the debt limit was the occasion for a bipartisan deal rather than the achievement of only one party's goals.
The one partial exception came in 2011, when Obama agreed to spending cuts without getting any tax increases.
But even that deal illustrates the constraints of the debt limit as a tool for advancing one party's agenda. Republicans had to accept that half the spending cuts would come from defense, which Democrats liked more than they did. And for all the wailing that sequestration has produced, it was more modest than what conservatives are asking for this year. It was not a structural change to the welfare state or a reduction in its scope.
So the question now is — or should be — whether any genuinely bipartisan deal could be coupled with an increase in the debt ceiling.
Reaching a deal would require what all voluntary exchanges do: a symmetric inequality of value. Republicans would give ground on policy A to gain it on policy B.