The clock is ticking down to another U.S. debt ceiling battle. Of course, the debt ceiling is a fake and a fraud just like the debate surrounding it.
The debt ceiling theoretically “limits” government borrowing and spending. In reality, it does no such thing. And it wouldn’t be necessary if Congress simply stuck to its constitutionally delegated powers
The Congressional Budget Office projects Uncle Sam will run out of money this fall, likely in October or November. “If that occurred, the government would be unable to pay its obligations fully, and it would delay making payments for its activities, default on its debt obligations, or both,” the CBO said in a statement.
In 2019, Congress suspended the debt limit for two years. That suspension ends on July 31.
Congress imposed the first debt ceiling in 1917. The Second Liberty Bond Act capped debt at $11.5 billion. This was supposed to put some kind of restraint on government borrowing. Of course, it didn’t. Every time the debt approaches the ceiling, Congress simply raises it. Between 1962 and 2011, lawmakers jacked up the debt “limit” 74 times, according to the Congressional Research Service.
In 2013, Congress came up with a new trick. Instead of raising the debt ceiling, it just suspended it. Congress set the last actual debt limit in 2014 with a built-in “auto-adjust.” The auto-adjust ended in March 2015 with the debt ceiling set at $18.1 trillion. Since then, Congress has suspended the debt ceiling three times.
As of July 20, the national debt stood at $28.49 trillion.
When the current debt ceiling suspension ends on July 31, the U.S. government will no longer be able to borrow money. According to the CBO, it will be able to limp along until this fall using “extraordinary measures.” According to Reuters, these range from “halting the issuance of special securities to state and local governments to suspending the daily reinvestment of Treasury securities held by a government employee retirement fund and the Treasury’s Exchange Stabilization Fund.”
It’s not completely clear how long the government can get by with accounting gimmicks. The CBO said it will depend on actual revenue collection and government spending, which can differ significantly from projections.
Given that the debt ceiling has never meaningfully restrained borrowing and spending, why doesn’t Congress just scrap it altogether?
I think there are two reasons.
First, doing away with the debt ceiling would expose America’s fiscal irresponsibility to the world. We all know the federal government has a bipartisan spending problem. But the debt ceiling creates the illusion of responsibility. It’s like a magic trick. We all know it’s not really magic. It’s an illusion created by the magician. But we like to believe it’s magic. It makes us feel good. The debt ceiling is an illusion that allows Americans to feel like their “representatives” are acting responsibly.
Second, the debt ceiling is ready-made for political theater. And there’s nothing politicians love more than political theater.
Senate Minority Leader Mitch McConnell has already indicated that the Republicans aren’t going to vote for a debt ceiling increase because of the Democrats’ wild spending spree that he called a “free-for-all for taxes and spending.”
“I can’t imagine there will be a single Republican voting to raise the debt ceiling after what we’ve been experiencing,” McConnell said.
It’s also a nice tool Republicans can use to get what they want out of the infrastructure deal Congress is currently haggling over.
Of course, this is all rank hypocrisy. The Republicans borrowed and spent like drunken sailors during the Trump years and they approved the last debt ceiling suspension. Even today, Republicans don’t oppose the infrastructure bill. They just want it to be their kind of infrastructure bill.
Senate Majority Leader Chuck Schumer called McConnell’s remarks “shameless, cynical and totally political.” Because we all know the Democrats are just trying to do what’s best for America. No political motivation there at all!
Failure to raise the debt limit would have “catastrophic economic consequences,” as Treasury Secretary Janet Yellen put it.
It would be utterly unprecedented in American history for the United States government to default on its legal obligations.”
Yellen’s not wrong. And this is exactly why Congress will raise the debt ceiling – or simply kick the can down the road by suspending it again.
In the meantime, brace yourself for hot political rhetoric and a lot of finger-pointing across the political aisle. We may even get another mythical government shutdown. But trust me, they won’t shut down any of the important things. The NSA will keep spying on you. The IRS will continue to collect taxes from you. The wars will rage on. And members of Congress will continue to collect their paychecks. There’s always money available for the things the government really wants to do.
All of this wrangling over the debt ceiling wouldn’t even be necessary if Congress followed the Constitution. It features a built-in limit on spending – the enumerated powers. Most of the things that Congress borrows and spends for aren’t authorized by the Constitution.
Consider the massive infrastructure bill currently under debate in Congress. The Constitution doesn’t delegate any power to Congress to spend money on “infrastructure.” In fact, President James Madison vetoed the Bonus Bill of 1817 – a plan that called for funding the construction of various roads, bridges, and canals throughout the country. In his veto message, Madison asserted the Constitution does not delegate power for such “internal improvements.”
The legislative powers vested in Congress are specified and enumerated in the eighth section of the first article of the Constitution, and it does not appear that the power proposed to be exercised by the bill is among the enumerated powers, or that it falls by any just interpretation with the power to make laws necessary and proper for carrying into execution those or other powers vested by the Constitution in the Government of the United States.
What about the commerce clause, you might ask? Madison addressed this as well.
“The power to regulate commerce among the several States” cannot include a power to construct roads and canals, and to improve the navigation of water courses in order to facilitate, promote, and secure such commerce without a latitude of construction departing from the ordinary import of the terms strengthened by the known inconveniences which doubtless led to the grant of this remedial power to Congress.
How about general welfare?
Nope. Not according to Madison.
To refer the power in question to the clause “to provide for common defense and general welfare” would be contrary to the established and consistent rules of interpretation, as rendering the special and careful enumeration of powers which follow the clause nugatory and improper. Such a view of the Constitution would have the effect of giving to Congress a general power of legislation instead of the defined and limited one hitherto understood to belong to them, the terms “common defense and general welfare” embracing every object and act within the purview of a legislative trust.
The Constitution puts strict limits on congressional spending. If Congress stayed within those limits, the government could easily pay for everything with the taxes it collects. It wouldn’t need to borrow billions of dollars every single month. And we wouldn’t need a fake debt ceiling to control borrowing.
Sadly, Congress doesn’t even pay lip service to constitutional spending limits. Instead, it pays lip service to the fake debt ceiling.
The whole debt ceiling debate is nothing but political gamesmanship. So, grab a chair. Pop some popcorn. And enjoy the show.