When Jack Kent Cooke fired George Allen the elder as the coach of the Washington Redskins, he remarked that “I gave George an unlimited budget and he exceeded it.” George should have been a congressman.
The great debate in Washington now is whether taxpayers should give Congress an unlimited budget with no questions asked. The big spenders in both parties have joined the bond salesmen on Wall Street to argue for the abolition of the federal debt ceiling.
Debt ceiling confrontations have sometimes had the salutary effect of concentrating national attention on the sheer size of the national debt. This has been the springboard for some of the most valuable fiscal reforms to stop, or at least slow, the high-speed spend-and-borrow cycle. In the 1980s the Gramm-Rudman deficit caps dramatically reduced deficit spending for several years. In the Obama years, House Republicans used the debt ceiling as leverage to force the White House to accept deep spending cuts. For three straight years, government spending and debt levels fell — the first time that had happened in 50 years.
The debt ceiling forces Congress to take stock of what it has done to the nation’s finances. Washington has doubled the debt over the past decade. It isn’t pretty and pretending that the flood of red ink can drench everyone forever is a prescription for financial catastrophe.
The big spenders argue that the debt ceiling is obsolete and a dangerous tool that could bring about a debt crisis in America. This is pretty rich coming from those who created a debt crisis in the first place, and worse, from the bond salesmen, who naturally love it when the federal government issues trillions of dollars of new debt, which makes more bonds to buy and sell.
President Trump, alas, is said to be sympathetic to this argument. His deal to work with Democrats to enact a temporary extension of the debt to the middle of December suggests he’s so eager to avoid a showdown that he puts himself at the mercy of Chuck Schumer and Nancy Pelosi. But even that is short of what his Treasury secretary, Steven Mnuchin, suggests, that Congress should have no statutory limits on its borrowing authority — to avoid a financial market meltdown caused by a default on federal Treasury bills.
This is upside-down “logic.” If America faces a financial crisis in its future it would much more likely be triggered by the sheer enormity of the $20 trillion debt, moving toward $30 trillion over the next decade. The cancer is the debt itself, not the attempt to cap the borrowing binge.
Ending the debt ceiling altogether is fiscally irresponsible in the extreme. Imagine the government as a business that runs up ever rising debt obligations year after year. If such a business goes to a bank to ask for an extended line of credit, the bank would require a plan to reduce the debt and stay out of bankruptcy. No bank would give such a business a blank check with no accountability. Only Congress would do that.
The United States has operated under a debt ceiling for exactly a century. Before 1917, Congress authorized every dollar of bond issuances and demanded to see the repayment schedules. This forced Congress to pay attention to business. It was a valuable barrier against irresponsible borrowing, and was suspended only in time of war or national emergency.
The value of a debt ceiling — and a mandatory vote by Congress to raise that limit — is that it focuses Washington and the nation on escalating debt levels. It forces Congress to come clean to the nation on how much it spends and borrows. The 535 members of Congress said they wanted to come to Washington to do a job. Nobody forced them to come to town, but millions can send them home if they can’t, or won’t, do that job.
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