The Debt Ceiling: Still An Arcane Financial Fiction Too Useless And Dangerous For These Dumb Times
Anyone who's been writing long enough can look back and find old work that did not age well. Comes with the territory.
On the other hand, every now and then you get to seem pretty prescient. Which brings me to the debt ceiling piece I wrote almost two years ago when we were facing the same dumb economic catastrophe we're facing today.
If you don't want to click back to my old column, really quick here, the debt ceiling is the most the U.S. Treasury can borrow, by dollar value, through bond sales. It is sometimes also called the "debt limit." It does not really have anything to do with spending. Rather, raising the debt limit means continuing to pay for obligations the United States has already incurred.
If a lawmaker wants to increase or decrease spending per se, the debate over that is supposed to happen when Congress passes a budget. The debt ceiling was first created more than a hundred years ago, and it sort of made sense back then, but it certainly doesn't now, and almost all other countries get by without any debt ceiling whatsoever.
Think of it this way: the household equivalent of having a debt limit would be getting together in a family meeting every few months to vote on whether mom and dad keep paying the mortgage or just stop and see what happens. In this scenario, the kids get an equal and binding say. So, let's hope they don't outnumber the adults.
Long story short, the debt ceiling is not only pointless, it is stupid. If Congress ever fails to raise it, that will mean the United States will default on its debt, that America will lose its status as the world's most dependable economic powerhouse, and that the world economy will fall into a tailspin.
Given how important it is for Congress to raise the debt limit when it is in danger of being breached, lawmakers have never failed at it. It's been raised dozens and dozens of times post World War II. Yet, we live in particularly dumb times.
Now, every time we approach the debt ceiling when a Democrat is in the White House, Republican lawmakers threaten to blow up the economy unless their demands are met. It's not like horrible people in Congress is a new phenomenon. Still, you didn't have segregationists in the mid-20th century holding up debt limit increases with demands that we all adopt racism.
It's not really a mystery where the big problem with the debt limit comes from these days. Government spending increased heinously under Donald Trump, but you know what happened nonetheless when the debt ceiling had to be raised? Congress voted with a large bipartisan majority to raise it.
Now, however, Republicans control the House, and Joe Biden is president. That means Republicans can once again put us all in an economic hostage situation in their attempt to secure ridiculously sweeping spending cuts.
The debt ceiling is a financial self-destruct button for the entire country. That does not seem like something it is wise to put in front of people like Marjorie Taylor Greene, Lauren Boebert, and Matt Gaetz.
Of course, given that it no longer serves any meaningful purpose, the debt limit could simply be eliminated. This could happen legislatively, would not have any ill effects on the economy, and would allow us to never again have to hear about a debt ceiling showdown in Congress.
For such an eminently sensible thing to occur though, first we'd have to live in a world where legislation could theoretically pass at all. Second, we'd have to stop calling it the "debt ceiling" or the "debt limit." Sorry, folks, but most voters aren't going to dig into this any further than its name, and on its face it sounds good, right? Like a limit to debt? The disingenuous pearl-clutching campaign postcards about so-and-so "VOTING TO ELIMINATE THE DEBT LIMIT" pretty much write themselves.
There is no good reason for the existence of the debt ceiling. Regardless, it will remain a thorn in the side of the U.S. economy, and another potential crisis we have to deal with anew every few months, so long as a Democrat is in the White House and the modern Republican Party remains largely unreasonable.
Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn't want to share the credit anyway. He can be reached at [email protected].