Bolling: The Debt Ceiling Debate – What’s It All About?
Last week, congressional Republicans passed a bill to increase the nation’s debt ceiling, while at the same time demanding modest decreases in government spending that have resulted in non-stop budget deficits and added greatly to our out of control national debt: White House reiterates refusal to negotiate on debt limit as pressure mounts.
Unfortunately, President Biden has refused to discuss spending reductions with Republican leaders, insisting that the debt ceiling be increased without requiring the federal government to do anything to tighten its belt and spend within its means. Let’s put this in perspective.
In the United States we do not have a balanced budget requirement. We should, but we don’t. As such, our federal government is free to spend more money every year than it takes in, and it has done so repeatedly over the years. In fact, over the past fifty years the U.S. has only had a balanced budget three times, in 1999, 2000 and 2001.
Annual budget deficits have varied over the years, but reached a high of $3 trillion in 2021 due to unprecedented government spending for COVID relief. These annual budget deficits accumulate year after year to create our cumulative national debt. Our national debt is currently approaching $32 trillion, and is expected to grow to $50 trillion by the year 2033!
While the United States does not have a balanced budget requirement, we do have a limit on how much debt the nation can incur. This limit is established by federal law. The nation’s current debt ceiling limit is $31.4 trillion. This means that the federal government cannot incur debts exceeding $31.4 trillion. If it does, it must stop spending money and it could default on the debt it owes to various institutions and countries.
We actually surpassed our $31.4 debt ceiling limit earlier this year. Since then the U.S. Treasury Department has continued making government payments under “extraordinary circumstances” authority they have under federal law, but they have indicated that they will not be able to do so beyond June of this year. Unless the Congress and the President agree to increase the debt ceiling limit, the federal government will effectively shut down at that time, and the U.S. will default on its debt, which has never happened before. Experts predict that this would have a devastating impact on America’s economy and the world economy.
Is it unrealistic of Republicans to demand that the federal government take some modest steps to stop spending beyond its means in exchange for an increase in the debt ceiling? Absolutely not! Democrats will clearly not reign in spending on their own, and the debt ceiling increase may be the only leverage in the foreseeable future Republicans have to demand that spending be scaled back and that we work toward balancing the budget and reducing the national debt.
It is totally irresponsible for Democrats to think they can keep spending money we don’t have every year to support bigger government, while running up more and more annual budget deficits and adding more and more to the national debt, but that seems to be exactly what they think.
In the legislation passed last week in the House of Representatives, Republicans agreed to increase the debt limit temporarily in exchange for a 9% reduction in government spending. This would effectively bring spending back to 2022 levels, and establish a cap of 1% per year on future spending increases. There was no expectation that Democrats would accept this proposal, but the hope was that it would provide a starting point for serious discussions that included a debt ceiling limit increase and some reasonable effort to slow down the federal government’s out of control spending train.
So far, President Biden and congressional Democrats have refused to discuss the Republican proposal, seemingly intent on continuing to grow the size of government and trying to pay for it by mortgaging the nation’s future.
Let me be clear. The federal government’s spending binge has occurred under both Republican and Democratic administrations, and both political parties share responsibility for our disgraceful record of habitual budget deficits and a national debt that now exceeds the nation’s entire gross domestic economic product.
And both political parties have a responsibility to, 1) increase the debt ceiling to avoid a default on our current debt obligations, 2) begin the process of reducing federal spending in an effort to move toward a balanced budget, and 3) put in place a long term plan to reduce the national debt over time.
This will require both parties to make short and long term concessions on spending, taxes, regulations and more. There simply is no other way to accomplish these goals in a time of divided government. Whether they are up to the task remains in doubt, but the time for political posturing has long passed, and the time for responsible leadership is at hand.
If they fail in this effort in the next thirty days the results could be catastrophic. Unfortunately, right now, President Biden and congressional Democrats seem prepared to play the game of high stakes political brinkmanship and run the risk of doing just that.
They are no doubt hoping that their friends in the media will lay the blame at the feet of congressional Republicans, which they think could give them some advantage in the upcoming 2024 elections. It is, quite frankly, disgusting to watch.