Among the thousands of laws passed by Congress, few are as unnecessary as the federal debt ceiling, suspended since 2019 but now back.
The debt ceiling fails to restrict congressional spending and tax laws that create the deficit that forces the government to borrow. Worse, it has become a way for a few lawmakers in a very divided Congress to regularly threaten to destroy the American economy in order to get what they want. Indeed, Congress has once again postponed dealing with 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 the Treasury hits the debt ceiling, it must ultimately refrain from issuing new bonds and notes and rolling over existing debt, increasing the possibility that the federal government will default on its loans. This is unlikely to happen. But this oft-repeated threat from Congress to deny an increase in the cap is being used as a political tool by both sides. It destroys good governance and can challenge the credit rating of the federal government, as a fight against the debt ceiling did 10 years ago.
The debt ceiling tells the treasury that it should not borrow more than a certain amount. But it’s not the Treasury Department that makes the decisions that force the government to borrow money. It’s Congress, and the debt ceiling does nothing to curb its rampant borrowing and spending. And blocking the government’s relentless need to borrow is undermining not only the national economy but the global economy as well, as U.S. bonds are seen as the safest investments possible.
Once upon a time, Congress cared deeply about federal borrowing. Until 1917, Congress required the Treasury Department to subject each new bond offer to a favorable or unfavorable vote. The need to fund US intervention in World War I led Congress to substitute a debt ceiling for the heavier process of voting on each increase in debt. Any remaining close monitoring of borrowing was swept away during World War II.
In 1962, the Treasury Department predicted that the government would spend about $ 500 million above the cap within two to three days before Congress could pass a new limit that would reach $ 300 billion, its level at the end of the year. the Second World War. Treasury Secretary Douglas Dillon, when told he could be held personally responsible for the overrun, reportedly said, “My God, this is almost going to break me.
Today, the debt ceiling is approximately $ 28.5 trillion.
It is easy, and not incorrect, to blame the runaway deficits on Congress. But in the end, the responsibility lies with the American people. If citizens demand higher spending and lower taxes, and the devil has the final say, Congress will comply. If we are concerned enough about the burden on our children and demand that Congress limit deficits, Congress will comply as well.
It’s time for all Americans to pay more attention to federal debt and demand that Congress make the necessary legislative changes to bring it under control, even if it requires sacrifices – as it will. Uncontrolled debt cannot last forever, and the sooner it is brought under control, the less painful the adjustments will be. Forget about the theatricality of the debt ceiling and focus on the real issues: adopting sensible budgets and ensuring that the money the federal government borrows is spent wisely.