Insights^

The Congressional Bourbon Caucus.  The Congressional Peanut Caucus.  The Congressional Rodeo Caucus.  It seems like there’s a congressional caucus for every type of issue or policy.  What exactly are congressional caucuses, and do they have any impact on the policymaking process?

All About Congressional Caucuses

Officially known as congressional member organizations, congressional caucuses are voluntary associations consisting of Representatives and Senators who share specific policy goals or interests.  These groups run the gamut of more serious and powerful organizations, such as the Congressional Black Caucus and the Republican Study Group, to ones with a more offbeat or narrow focus, such as the Congressional Bowhunting and Archery Caucus, and the Congressional Candy Caucus.  Importantly, these congressional member organizations are not to be confused with party caucuses and conferences, which are the House Democratic Caucus, House Republican Conference, Senate Democratic Caucus and Senate Republican Conference.

Congressional caucuses date back to the early 1800s and have grown in number in recent years.  There are currently 460 caucuses in the 117^th Congress, compared to only 100 member organizations in 1993.   Any caucus that includes House members must register with the House Committee on House Administration and follow certain rules, which include the following:

• Caucuses cannot use franking privileges (free mail privileges), although individual members may use official resources for communication related to a caucus.
• At least one officer or chair of a congressional member organization must be a House member.
• Members can use personal funds to support a caucus but are not allowed to accept goods or services from private organizations to support a caucus.

The Senate does not have any separate guidelines or regulations for Senators who participate in caucuses and are just subject to follow the Rules of the Senate and the Senate Code of Official Conduct,

Types of Caucuses

Congressional caucuses can fall into one of three categories depending on their constituency and interests.

• Ideological Caucuses.  Caucuses based around an ideology can represent certain ideological views within a particular party.  In America’s two-party system, each party tends to have a wide ideological spectrum or a “big tent,” meaning there is room within a party for members with more specific ideologies to gather.  All ideological caucuses are in the House, and current examples on the Democratic side include the Blue Dog Coalition, the New Democrat Coalition, and the Congressional Progressive Caucus.  Republican examples of ideological caucuses include the Tuesday Group, the Republican Study Committee, and the Freedom Caucus.  One group, the Problem Solvers Caucus, contains House members of both parties that seek bipartisan collaboration on key issues.
• National Constituency Caucuses.  Some caucuses advocate the interests of specific groups of constituents, such as women, racial or ethnic groups, and veterans.   Examples include the Congressional Black Caucus, the Congressional Hispanic Conference, the Congressional Asian Pacific American Caucus, and the Servicewomen and Women Veterans Caucus.
• Interest Group Caucuses.  The most common caucuses consist of members with a shared policy or interest.  Examples of these generally bipartisan caucuses include the Congressional Bike Caucus, the Congressional Coal Caucus, the Congressional Dairy Farmer Caucus,  Congressional Fire Services Caucus, and the Congressional Cyber Security Caucus.  A number of interest group caucuses focus on medical issues or diseases, such as the Congressional Cystic Fibrosis Caucus, the Congressional Telehealth Caucus, the Congressional Lupus Caucus, and the Rare Disease Caucus.

Do Caucuses Matter?

On paper, caucuses have no real authority.  Unlike committees, caucuses lack the ability to markup bills or hire their own staff, for instance.  However, they do serve a function by providing a way for like-minded Representatives and Senators with mutual interests and goals to get to know one another.  Through these relationships and associations, caucuses members often work together to develop specific ideas that can become legislation.  During the 115^th Congress and 116^th Congress, members of the Problems Solvers Caucus periodically released proposals and legislation on important issues where caucus members believed Democrats and Republicans could find common ground.  For example, some of the Problem Solvers Caucus’s ideas eventually became law, including a proposal to repeal the medical device tax. At the moment, the Problem Solvers Caucus has been active during the 117^th Congress around the bipartisan infrastructure framework.

Additionally, caucuses formed around diseases and medical issues are particularly active on creating health care legislation.  For instance, Reps. Diana DeGette (D-CO) and Tom Reed (R-NY), who co-chair the Congressional Diabetes Caucus, have introduced legislation to address high insulin prices and expand diabetes prevention programs.  Additionally, members of the Congressional Telehealth Caucus have introduced legislation to ensure some telehealth services temporarily expanded under the COVID-19 public health emergency are made permanent.

On July 31, the federal government is scheduled to hit the debt ceiling, meaning it will no longer be able to borrow money.  Fights over the debt ceiling have been become increasingly common in recent years, and once again, lawmakers find themselves squabbling over what to do so the federal government is able to pay its bills.  If there’s anything Congress can’t do, it’s to take no action at all, as it would mean disastrous implications for both the US and global economy.

A Brief History of the Debt Ceiling

The debt ceiling, or debt limit, is a cap on the total amount of money the Department of the Treasury can borrow and is set by Congress.  The ceiling applies to nearly all debt accrued by the federal government, including over $21 trillion in debt held by the US public, and $6 trillion in debt the federal government owes itself for programs like Medicare and Social Security.

It should be noted that debt and deficit have different meanings.  The deficit refers to the difference between revenue the federal government takes in from taxes and other sources across each fiscal year, while the debt refers to deficits accrued across multiple years.

The debt ceiling wasn’t always around.  Originally, Congress signed off on all debt by authorizing individual bonds through legislation.  However, the cost of financing America’s involvement in World War I led Congress to establish a debt limit though the Second Liberty Act as a way to simplify the borrowing process and allow the Treasury Department to issue as many bonds as needed instead of waiting for Congress to approve every single bond.

In recent years, rising national debt and an increasingly polarized Congress have made the process of raising the debt ceiling much more contentious.   Parties have occasionally sought policy concessions from one another in exchange for agreeing to raise the debt limit, leading to a few occasions where political brinkmanship has actually caused the federal government to hit the debt limit and trigger debt ceiling crises in 1995-1996, 2011, and 2013, when the government becomes uncomfortably close on defaulting on its debt.

Enacted in August 2019, the Bipartisan Budget Act of 2019 suspended the debt ceiling to its current level of $28.5 trillion to July 31, 2021.

What Happens If the Debt Ceiling Isn’t Raised?

During a June 23 appearance before a Senate Appropriations subcommittee, Treasury Secretary Janet Yellen said a failure to raise the debt ceiling would have “catastrophic consequences” and could potentially lead to a financial crisis.  Indeed, hitting the debt ceiling would mean the federal government would eventually be unable to make its debt payments after a certain period of time.  This would result in the government defaulting on its debt obligations, something that have never happened in US history.

With the government unable to pay its debts, millions of daily obligations including Social Security payments, salaries for federal civilian employees and military servicemembers, veterans’ benefits, utility bills, and others would be have to be at least temporarily defaulted.  Next, global financial markets would enter a state of turbulence, as both international and domestic markets rely on the stability of US financial instruments and the economy.  Additionally, interest rates would rise and the demand for Treasury securities would fall as investors begin to reconsider the safety of Treasuries and either pull back or stop investing entirely.  Higher interest rates would in turn have strong reverberations across the economy, impacting credit cards, mortgages, car loans, and other forms of borrowing and investment.

Even if the government doesn’t actually default on its debt obligations, the mere threat of default could result some negative economic consequences.  During the debt ceiling crisis of 2011, Standard & Poor’s downgraded the US credit rating from AAA to AA+ with the rationale that the debt limit fight was a sign of “America’s governance becoming less stable, less effective, and less predictable.”  During the 2013 debt ceiling crisis, credit agency Fitch warned it may cut the US credit rating due to political gridlock, and Chinese rating agency Dagong downgraded the US from A- to A.  In 2014, Fitch did however restore the US credit rating to AAA.

“Extraordinary Measures” to Stave Off Default

If the federal government does hit the debt ceiling on July 31, it won’t immediately default on its debt.  That’s because the Treasury Department can take so-called “extraordinary measures” that were previously deployed during the debt ceiling crises in 2011 and 2013.  Extraordinary measures are accounting maneuvers that allow the federal government to continue to borrow money and pay bills without exceeding the debt ceiling.  These measures usually involve not fully investing federal employees’ Thrift Savings Plan and civil service retirement plan funds in special Treasury securities.  For example, if federal employees have invested $100 billion in the Thrift Savings Fund, the Treasury could opt to issue only $90 billion to the fund, creating $10 billion that could be used to auction more debt to the public and raise more money for the Treasury.  After the debt ceiling is raised or suspended, investments in those funds would resume and lost interest is credited back to the accounts, leaving the savings and pensions plans unaffected.

But extraordinary measures only provide a temporary means for the government to pay its bills after the debt ceiling is reached, and it’s not clear how long the Treasury Department can exercise extraordinary measures after July 31.  According to a July 21 statement from the Treasury Department, the higher spending and revenues associated with the COVID-19 pandemic is driving uncertainty over how long extraordinary measures could allow the government to continue to meet its debt obligations.  For example, a July 21 report from the Congressional Budget Office (CBO) projected that extraordinary measures would probably run out sometime during the first quarter of the next fiscal year, which begins on October 1.  However, in a July 23 letter to Speaker Nancy Pelosi (D-CA), Yellen said there are scenarios where “extraordinary measures could be exhausted” soon after Congress returns from recess in early September.

What Will Congress Do?

As in the lead-up to previous debt crises, lawmakers in both parties generally agree on the need to increase the debt limit but have yet to settle on any specific proposals, such as raising the debt limit in a stand-alone bill or attaching a debt-ceiling increase to an annual spending bill. The most gridlock lies in the evenly split Senate, where Democrats have no path forward on attracting at least 10 Republican votes to overcome a filibuster on a measure to increase the debt ceiling.  In an interview with Punchbowl News on July 20, Senate Majority Leader Mitch McConnell (R-KY) threw cold water on any prospect of GOP support, saying “I can’t imagine there will be a single Republican voting to raise the debt ceiling.”  Just a day later, Sen. Lindsey Graham (R-SC) suggested Senate Republicans may seek policy concessions from Democrats on raising the debt limit when he pointed out that “about half the time the debt ceiling has been increased has been accompanied by something.”  Sen. John Thune (R-SD) later echoed Graham’s comments by expressing support for limits in discretionary spending, similar to approach used to resolved the debt ceiling crisis in 2011.

While Senate Democrats do have the option of bypassing the filibuster and adding a debt limit increase to the budget reconciliation process, doing so is fraught with challenges.  To use the reconciliation process, Democrats would have to add the debt ceiling increase to their $3.5 trillion infrastructure package, which is still under negotiation and would require unanimous support from all members of the Senate Democratic Caucus.  Additionally, the debt ceiling measure would require approval from the Senate parliamentarian, who decides what does and does not qualify for the reconciliation process.  Both the negotiation process and review by the parliamentarian would take up precious time, and the parliamentarian is not expected to rule on what can be included in the reconciliation process until after the Democrats pass their budget resolution next month.

Regardless, lawmakers know that something must be done about the debt ceiling.  However, if recent history shows us anything, it’s that the federal government can at times get a little too close to defaulting on its debt, creating tangible consequences like lower credit ratings.  Over the next few weeks, the public will be watching closely as lawmakers attempt to walk a fine line between averting an avoidable economic crisis and addressing the nation’s growing debt.