President Donald Trump said Thursday there are “a lot of good reasons” to get rid of the U.S. debt ceiling as Senate Democrats began exploring a possible deal with the president to end the recurring fiscal standoffs.
“For many years, people have been talking about getting rid of debt ceiling altogether,” Trump told reporters Thursday at the White House. “And there are a lot of good reasons to do that, so certainly that’s something that will be discussed. We even discussed it at the meeting that we had yesterday.”
Senate Minority Leader Chuck Schumer and Trump agreed during an Oval Office meeting Wednesday to pursue a negotiation aimed at permanently ending the brinkmanship over a possible default on the nation’s debt, according to a person familiar with the discussions.
Schumer broached the idea with Trump and Vice President Mike Pence in a meeting with House Minority Leader Nancy Pelosi and Republican congressional leaders where Trump sided with Democrats on a deal to combine a short-term debt limit extension with a hurricane relief bill.
“We have a great respect for the sanctity of the debt ceiling,” Trump said. “Chuck does and Nancy does and we all do. So that will never be a problem.”
He didn’t mention the Republican leaders by name -- House Speaker Paul Ryan of Wisconsin or Senate Majority Leader Mitch McConnell of Kentucky. McConnell’s office declined to comment. But the No. 2 Senate Republican, John Cornyn of Texas, said Thursday he was opposed to abolishing the debt limit.
The Senate on Thursday passed a legislative package that includes a suspension of the debt ceiling through Dec. 8. Treasury Secretary Steven Mnuchin had asked Congress to act by Sept. 29 to avoid a damaging default.
The U.S.’s rating companies have long noted that the structure of the U.S. debt limit is very unusual in the way it separates congressional spending decisions from the mechanisms needed to finance them.
“They should abolish congressional approval for the debt ceiling,” said John Chambers, former chairman of Standard & Poor’s sovereign rating committee who was there when the firm downgraded U.S. debt during a 2011 debt limit fight. He said that when Congress passes spending bills that will require additional debt, lawmakers should simultaneously “vote for a higher amount of debt outstanding.”
Eliminating the debt limit altogether would be very difficult for many Republicans to swallow, particularly in the House. Republican Representative Bill Flores of Texas called it a “horrible idea.”
Conservatives have used the ceiling on borrowing authority as a negotiating point to try to force broader government spending cuts.
"You’re going to have trouble getting people to agree to having it raised automatically," said Republican Senator John McCain of Arizona.
The conservative Republican Study Committee on Thursday released a list of 19 policy suggestions aimed at reining in federal spending that could earn their support on a measure to raise the debt ceiling.
“While some have advocated for a ‘clean’ debt limit increase, this would simply increase the borrowing authority of the government while irresponsibly ignoring the urgency of reforms,” Representative Mark Walker of North Carolina, who chairs the group, wrote in a letter to Ryan. Walker noted that the last vote in the House to raise the debt ceiling without any conditions only attracted the support of 28 House Republicans.
Ryan told reporters Thursday that he wouldn’t support suspending the debt limit entirely because “there’s a legitimate role for the power of the purse and Article One powers” in the Constitution.
Even so, there are a number of Senate Republicans who would support such a move.
"I want to get rid of it," Senate Finance Chairman Orrin Hatch of Utah said Thursday.
Republican Senator David Perdue of Georgia said Thursday that the debt ceiling has been "ineffective" and he will work on a conservative proposal before December to scrap it and overhaul the process.
"It’s an unpopular vote that nobody likes taking,” John Thune of South Dakota, the No. 3 Senate Republican, said Thursday. “There is probably some support on both sides for that. But I hope the president will be talking to Republican leadership about that."
Pelosi also backed the idea.
“Why don’t we just do away with it?" she told reporters Thursday. "We’re not going to let the government default."
Democrats Elizabeth Warren of Massachusetts and Mark Warner of Virginia approached Schumer earlier this summer with the idea of jettisoning the debt limit, asking them to consider raising it with Trump, according to a Democratic aide.
At the Wednesday meeting, Schumer raised the idea, nothing that it had the support of both liberal and moderate Democrats, according to the aide. He suggested that all sides go back and talk to their respective party members to see if they could agree on a specific proposal to add to an end-of-the-year deal. Trump responded positively to the suggestion, the person familiar with the discussions said.
Trump said Thursday that the debt ceiling is a “sacred trust” and “as long as it’s there, it will never be violated.”
The federal debt limit was created in 1917 to make it easier to finance World War I by grouping bonds into different categories, thus easing the legislative burden on Congress. Before that, lawmakers approved each bond separately.
Over the years, lawmakers started using the limit as leverage to obtain other concessions.
The most significant standoff occurred in 2011, when conservatives forced a showdown that rattled financial markets and prompted S&P to downgrade its rating on sovereign U.S. debt. The battle resulted in $2 trillion in budget cuts.