Jenni LeCompte at the Treasury Department fleshes out the permanent debt limit de-fanging proposal that Tim Geithner offered as part of the initial White House term sheet on the fiscal slope. She adds the nice touch of calling it the McConnell proposal, since the Republican Senate leader offered a version of it, which actually went into practice, during the last debt limit showdown. Here’s how Geithner described it on Meet the Press over the weekend:

What we propose to them is they extend what’s called the McConnell provision. This was a solution Senator McConnell offered last summer, which was enacted — summer of 2011 — which was enacted into law, supported by Republicans. And the way that works is the President would have the obligation periodically of requesting an increase in the debt limit, and then Congress would have the chance, then, to express its views on the merits of that proposal by disapproving that. And then the President would have to decide, if a bill came to his desk, about whether to veto that or sign it. Of course, he’d veto it in that context. And the virtue of that mechanism proposed by Senator McConnell, a man of impeccable conservative credentials, is to make sure that the country is not left at risk of periodic threats of default. It’s a very good idea. It was a Republican idea. And we’re suggesting they extend it.

The “man of impeccable credentials” boot-shine lays it on a bit thick, but that’s generally the idea. Basically, Congress would get their opportunity to weigh in on the debt limit without threatening the full faith and credit of the US government in the process. In an extreme circumstance, a 2/3 veto override would block the debt limit. But as a practical matter that would probably never happen. And so Congress can return the debt limit to its historical purpose, a chance to fulminate about the “mountain of debt” without a serious threat that the government would not be allowed to borrow to pay bills already incurred through legislation and appopriations.

I suppose you could envision a loophole, in the way LeCompte describes it, in the idea that “the provision was specifically designed to permit increases in the debt limit only after both houses of Congress were given the opportunity to vote on whether to approve or disapprove any increases.” What if the House or Senate just never holds a vote? A-ha, well the debt limit increase automatically takes effect after 15 days of the request unless the resolution of disapproval passes and clears the veto (if the resolution passes and gets vetoed, Congress has 15 days to override or the debt limit gets raised automatically). So there’s no real loophole there.

Which is why it has almost no chance of passing. Typically, politicians don’t willingly vote to trade away their own leverage for nothing. Maybe in exchange for Republicans getting everything they ask for in a debt limit deal, they enact something like this. But I’d be surprised if it were for any permanent length of time, rather than on a temporary basis. Although they took a hit politically, Republicans got something tangible from the debt limit debacle – a $1 trillion spending cap that constrains government finances a decade into the future (more, really, given the realities of baselines). Moreover, they set the precedent of a big showdown over the debt limit, along with the Boehner rule of $1 in cuts for every $1 in debt limit increase. Why would Republicans give that up? They have precious little other leverage to speak of, and their ideas are unpopular.

In short, Treasury has a great idea here in theory, because there’s no reason for the debt limit to exist, and this plan basically renders it irrelevant. If and when Democrats get a hold of all three branches of government, I’d expect them to pass this immediately. But in a divided Congress, I doubt the side not in the White House would vote in favor of their own irrelevance. Treasury should fire up the $1 trillion coin-minting machine, a perfectly legal way for Treasury to keep paying the bills if Congress stubbornly refuses to act. Because that’s what it will take to get this debt limit increased without massive concessions, and though it sounds ridiculous, it’s no more ridiculous than the concept of the debt limit itself. Either that, or the President could simply judge that the 14th Amendment provision, which says “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned,” supersedes the debt limit, making it inactive.

Get ready for more of these fun debates come February.

UPDATE: Minority Leader Nancy Pelosi endorsed the “McConnell rule” in her press conference today, so get ready for this to be the official name.

Leader Pelosi: Well, I don’t think the debt ceiling has a place in all of this. I think that we continue the McConnell rule which said: the President sends it over, if two-thirds of the Congress objects then that is overturned. So, we have a path away from that because, really, that is holding hostage any investments in the future that we can make, any fairness that we can inject into the tax, into the revenue challenge that we have.