End the Debt Ceiling

Both useless and misused.

Along with getting Congress to increase the debt ceiling so that the government can pay its bills, at least until December, President Trump also suggested getting rid of the debt ceiling altogether.
It’s an idea that merits very serious consideration.
There are two clauses of the Constitution at work here. The first, Article I, Section 9, says, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” In other words, the Treasury can only spend money that Congress has told it to spend. And the Treasury has no option but to spend it. Presidents used to “impound” funds they didn’t want to spend, but that implied power ended with the Budget Control Act of 1974. (It should be called the Budget Out-of-Control Act, as it caused federal spending to spiral sharply upwards, but that is a story for a different post.)
The second clause, Article I, Section 8, says, “The Congress shall have the Power . . . To borrow Money on the credit of the United States.” In other words, Congress, not the Treasury, must decide to borrow money, authorizing the Treasury to do so.
Until 1917, Congress passed legislation to authorize each individual bond offering. But when we entered World War I, it was obvious that borrowing needs would be huge (the debt went from $1.225 billion in 1916 to $25.4 billion in 1919). And so Congress established the debt ceiling in place of authorizing each bond issue.
So what does the debt ceiling accomplish? Not much. If Congress appropriates money in excess of expected revenues, then the Treasury has no choice but to borrow the difference. The alternative is default, which would have catastrophic consequences. If Congress doesn’t want to raise the debt ceiling, its only option is to cut spending. Good luck with that.
For many years, Congress, knowing it had no choice, routinely raised the debt ceiling as needed, with little public notice beyond an occasional tut-tut editorial in conservative newspapers. For a good many years, a debt ceiling increase was attached to every annual budget resolution.
But as the middle emptied out in American politics in recent decades, Congressional authorization of a higher debt ceiling has become a political football, with each side trying to embarrass the other into making concessions. The government (or at least the unessential parts of it) has been shut down several times as the politicians played the sort of cynical politics that enrages most ordinary citizens.
Most countries have no debt ceiling. (Denmark has one, but it’s so much higher than the actual Danish national debt as to be effectively a nullity.) Of course, most countries’ budgets are largely determined by the executive. But in the United States, while the president submits a budget every year, Congress pays little attention to it, often proclaiming it “dead on arrival.”
What would eliminating the debt ceiling do? It would save members of Congress from having to make a vote that displays Congressional fiscal irresponsibility. It would prevent the sort virtue signaling and political brinkmanship that serve no purpose other than the most cynical ones. It might even help force the government into a desperately needed fundamental reform of the budget process, a process that has been slowly, but inexorably, leading the country into a fiscal disaster for more than four decades.
23
Shares
Google+ Print

End the Debt Ceiling

Must-Reads from Magazine

Joe Biden vs. the Post-Labor Left

The liberals strike back.

Given his reputation for favoring even wildly impractical progressive policy objectives, few might have guessed that the first prominent liberal to stand athwart the Democratic Party’s reckless lurch to the left would be Joe Biden. With liberals fawning over progressives firebrands and amid the growing unanimity around the notion that there is no social and economic challenge that cannot be solved by throwing money at it, the former vice president has emerged as a vocal opponent of at least one idea popular among liberal reformers and libertarian technocrats alike: a universal basic income.

34
Shares
Google+ Print

Is Trump Turning It Around?

audio: https://soundcloud.com/commentarymagazine/commentary-podcast-41

With Noah Rothman sadly out of commission for the day, Abe Greenwald and I discuss the president’s speech at the UN (good!), the attacks on it (mostly bad!), why his polls have seen an uptick (less Trump!), who’s crazier about health care (liberals!) and the evils of honey (yes, honey). Give a listen.

4
Shares
Google+ Print

Aung San Suu Kyi Fooled Us All

Was it all an act?

When Myanmar’s de facto leader, Aung San Suu Kyi, took to the lectern on Tuesday, she was speaking to us. Suu Kyi’s silence as hundreds of thousands of Rohingya Muslims are driven from their homes amid a campaign of state-sponsored pogroms had been deafening. When Suu Kyi finally addressed the issue, she spoke in perfect English to the international community, but she was not being entirely honest.

37
Shares
Google+ Print

Trump’s Turtle Bay Triumph

A different president; a normal foreign policy.

President Trump delivered his first speech to the United Nations General Assembly on Tuesday, and it was a triumph.

128
Shares
Google+ Print

Both Students and Their Mentors Deserve Blame for America’s Violent Streak

"Drummed in your dear little ear."

America is lurching toward a civic crisis. The symptoms are most evident in America’s youth who, in their rash intemperance, are apt to say aloud what their elders are clever enough to imply. Subtly or overtly, the message is the same: Violence is coming.

50
Shares
Google+ Print