Eliminate the Debt Ceiling
Terry H. Schwadron
Oct. 2, 2021
Many debates in Congress may involve important policies, but the impact often is blunted by what feels like childish posturing. Ultimately, it turns out there is a reek of hypocrisy about the intent of the debaters.
Take the back-and-forthing this week over the dual issues of a “continuing resolution” to avoid unnecessary government shutdown amid a pandemic, and the companion issue of what should be the routine raising of federal debt limits to cover costs that our government already has incurred.
There was no reason for these twin concerns to peak amid the simultaneous debate over future spending bills for physical and human infrastructure, but Senate Republicans, in this case, forced that to be the case. As a group, they stood stubbornly to oppose any attempt to raise the debt ceiling — a naturally recurring need — to play out their fitfulness over Joe Biden’s plans for future spending that they oppose.
In so doing, they threatened American citizens with government shutdown and with global financial chaos from possible failure for this country to pay its bills — all because they are no longer the majority that can dictate.
Let’s at least call that childish, if not worse. The passage of the continuing resolution merely delays the same discussion until December.
But here’s where the hypocrisy kicks in.
That continuing resolution, a bipartisan compromise to split the bill-paying from the debt issue, in and of itself raised government spending. The resolution includes billions of dollars to assist in responding to two recent hurricanes as well as other money to aid in resettling refugees arriving from Afghanistan.
Or, in practical terms, Republicans were willing to raise actual spending, while they insisted that Democrats could not.
The whole situation is creating uncertainty for financial markets, for businesses and for individuals — adding to the already existing uncertainties of covid effects, dismissals of employees over mandated vaccine enforcement, and the evident effects on economic supply lines across borders. Leaving the country’s ability to borrow money unresolved is worse than childish — it is political brinksmanship for no apparent purpose other than for positioning for the next election.
The political maneuvering required by all this posturing is creating unneeded, time-sucking energy, even as more important issues about guaranteeing voting rights, addressing abortion, police misconduct, and environmental disaster struggle to gain a foothold in the national conversation.
Eliminate the Problem
Personally, I think the answer here has been well-voiced by Treasury Secretary Janet Yellin, a seasoned economist who comes across as thoughtful, caring and very practical.
In congressional testimony this week, Yellen supports abolishing the federal debt limit, calling its very existence a “very destructive” threat to the full faith and credit of the U.S.
Yellin argued that it makes no sense to limit the Treasury’s ability to pay bills already approved by Congress and the president with an arbitrary cap on how much debt it can issue. The debt should rather be handled as a tool for government, just as it is for families or businesses.
Sometimes, it is necessary to put some expenses on a credit card and pay the debt off over time. Raising the debt ceiling does not directly affect the size of the national debt or future congressional spending. Doing so simply allows Treasury to generate more cash to cover expenses already approved by lawmakers and the president by selling bonds.
It is bad government policy — or political gamesmanship — to require periodic approvals of the debt limit by itself.
The best time to consider whether the country can afford a proposal is when the Congress is deciding whether to pass it in the first place.
That’s why we’re having arguments over the cost of infrastructure packages proposed by the White House. It is primarily because we did not have these discussions when the then-Republican-majority Congress passed huge tax cuts for the wealthy and corporations without paying for them that has created this current would-be crisis over an arbitrary debt limit.
It is inside-out thinking to seek to control what passes by months-later votes about how much borrowing the country can do. Indeed, that same Republican-majority Congress voted three times — with Democratic support — during the Trump administration to suspend debt ceilings.
Instead, the periodic debt ceiling debate has become an excuse for one party to seek concessions from the other — never reducing the size of the national debt.
We ought to eliminate the debt ceiling and stop acting as children.