Jenni LeCompte, Assistant Secretary for Public Affairs at the Treasury Department, has a post up explaining in detail the clever plan for eliminating the debt ceiling that Tim Geithner floated late last week. The new twist is that LeCompte refers to the idea as the “McConnell Provision,” noting its structural similarity to something McConnell came up with as a one-off during the 2011 debt ceiling fight.
The basic idea is simple. Congress passes appropriations bills. Congress also writes laws governing entitlement programs. Those factors determine how much the government spends. Congress also writes tax laws. Those laws determine how much revenue the government has. Then the Treasury borrows if there’s a gap. Right now, when Treasury needs extra borrowing authority the president asks congress for it and if congress doesn’t comply we get a crisis. Under the McConnell principle we flip it. When Treasury approaches the debt ceiling, congress has the right to pass a motion disallowing new borrowing. Then the president can veto that motion and borrow the money that needs borrowing.
That allows opposition members of congress to engage in the kind of hypocritical grandstanding that’s traditionally been at the core of the debt ceiling, without allowing it to become a market-shattering disaster.