Although such a mechanism was previously proposed by Senate Minority Leader Mitch McConnell, Republicans are resisting now. They fear a loss of leverage over spending cuts if congressional approval is no longer required to increase the borrowing limit.
If Obama should fail to secure a long-term solution to the debt ceiling in the context of the current fiscal-cliff negotiations, there is another way out – invoking the US Constitution.
In the wake of the Civil War, the government wanted to make clear that loans to the US government were still good (while Confederate debt would not be honored). Accordingly, the 14th Amendment includes the following provision: “The validity of the public debt of the United States, authorized by law... shall not be questioned.”
In a 1935 case (Perry v. US) the Supreme Court determined that Congress does not have the authority to renege on its obligations to its lenders. The president, then, could declare as unconstitutional the current debt-ceiling law – which requires congressional approval to raise the limit – or at least use such a threat as leverage.
The law goes back to the amended Second Liberty Bond Act of 1917. Its intent was to facilitate the financing of WWI through the issuance of long-term bonds. Until last year, when it became a political issue, Congress routinely raised the statutory debt limit as needed – always with bipartisan support.