ANOTHER VIEW: Debt ceiling doesn’t work. Ablosih it.
Of all the thousands of laws enacted by Congress, few are as useless as the federal debt ceiling.
The debt ceiling fails to constrain the congressional spending and tax laws that create the deficit that requires the government to borrow. Worse, it has become a way for a few legislators in a closely divided Congress to regularly threaten to tear down the American economy in order to get something they want. Indeed, Congress has once again deferred addressing the problem caused by the debt ceiling, leaving the Treasury Department to take unusual steps to avoid crossing the existing legal threshold for as long as possible.
If Treasury reaches the debt ceiling, it must eventually refrain from issuing new bonds and notes and from rolling over existing debt, raising the possibility of the federal government defaulting on its loans. That is unlikely to happen. But this oft-repeated threat by Congress to deny an increase in the ceiling is wielded as a political tool by both parties. It is destructive of good government and can put the credit rating of the federal government into question, as a debt ceiling fight did 10 years ago.
The debt ceiling tells the Treasury Department it must not borrow more than a certain amount. But it is not the Treasury Department that makes the decisions that require the government to borrow money. It is Congress, and the debt ceiling does nothing to constrain its profligate borrowing and spending. And blocking the relentless need for the government to borrow undermines not just the national but the world economy because U.S. bonds are considered the safest possible investments.
Once upon a time, Congress cared deeply about federal borrowing. Until 1917, Congress required the Treasury Department to submit every new bond offering to an up-or-down vote. The need to finance U.S. intervention in World War I led Congress to substitute a debt ceiling for the more cumbersome process of voting on every increase in the debt. Any remaining close oversight of borrowing was swept away during World War II.
In 1962, the Treasury Department projected that the government would spend about $500 million over the ceiling in the two to three days before Congress could adopt a new limit that reached $300 billion, its level at the end of WWII. Treasury Secretary Douglas Dillon, when told he might be held personally responsible for the overrun, was reported to have said, “My God, it’ll almost break me.”
Today, the debt ceiling stands at roughly $28.5 trillion.
It is easy, and not incorrect, to put the blame for runaway deficits on Congress. But ultimately, the responsibility lies with the American people. If citizens demand higher spending and lower taxes and devil take the hindmost, Congress will comply. If we are concerned enough about the burden on our children and demand that Congress rein in deficits, Congress also will comply.
It is time for all Americans to pay more attention to the federal debt and demand that Congress make the necessary legislative changes to bring it under control, even if that requires some sacrifices — as it will. Runaway debt cannot go on forever, and the sooner it is brought under control, the less painful the adjustments will be. Forget about the theatrics of the debt ceiling, and focus on the real issues: passing sensible budgets and ensuring that the money the federal government does borrow is spent wisely.
Reprinted wih permission from The S.C. Press Association and The Charleston Post & Courier.