It’s Time To Eliminate The “Debt Ceiling”

The "debt ceiling" is phony, contrived, and needs to be eliminated.

While we prepare ourselves for a month-and-a-half long game of chicken over raising the national debt ceiling, perhaps its time that someone stated the obvious, which is that the very idea of a “debt ceiling” is fundamentally absurd:

The federal debt ceiling is utterly redundant, since Congress already has the sole constitutional power to authorize any federal spending. Even if Congress were concerned about the remote possibility of the Treasury borrowing a lot of cash just for the fun of it and piling it in the White House basement (since there’s no way it can be spent on anything without explicit permission from Congress), there would be ways to prevent that without any debt ceiling — by authorizing the Treasury to issue new debt only as long as the amount of cash on hand does not exceed the current federal budget. The mere fact that the debt ceiling serves no useful function should be more than sufficient reason to repeal it.

But in fact the debt ceiling is not merely useless – it is potentially harmful. It encourages and enables unhelpful grandstanding by politicians. Some of them even live to regret it: our current president recently had to repudiate his own demagoguery from a few years ago when the previous administration was seeking to increase the debt ceiling. So why not just eliminate this generator of public cynicism and embarrassment for politicians? More importantly, the games politicians play with the debt ceiling may one day end up seriously harming the country. And I’m afraid there is a fair chance that day will come quickly. Treasury Secretary Geithner claims that failure to increase the debt ceiling soon may cause a double dip recession, and, unfortunately, he may be right.

Brendan Loy agrees:

Congress already controls the purse-strings, so if Congress would like us to stop borrowing money, then CONGRESS SHOULD STOP F***ING SPENDING MORE MONEY THAN WE TAKE IN. It’s as simple as that. Having this additional, superfluous “debt limit” accomplishes nothing except to give Congresscritters an opportunity for consequence-free political grandstanding. And why wouldn’t they grandstand? There’s no disincentive. The public at large, in all its ignorant glory, fails to demand either spending cuts (except in the abstract) or tax hikes, yet always opposes “raising the debt limit,” even though raising the debt limit is not a policy decision, it’s a math problem — one whose parameters are 100% determined by taxing and spending decisions that are already long made by the time the debt limit “issue” comes up for a vote. But the public doesn’t care about this. The public loves spending and hates revenue, but also hates debt. So of course the politicians grandstand!

George Will said much the same thing back in January when he pointed out that the United States is the only country in the world that does this:

I know of no other developed nation that has a debt ceiling. This is a purely recurring symbolic vote to make people feel good by voting against it.

The trouble is it’s suicidal if you should happen to miscalculate and have all kinds of people voting against it as a symbolic vote and turn out to be a majority. Because if the United States defaults on its sovereign debt, the markets will be — well, it will be stimulating.

But that’s exactly what the debt ceiling is, a political exercise. There is nothing in the Constitution that requires that such a limit exist and, as noted above, Congress already has all of the necessary power to tax and spend to allow it to control the budget. In fact, there was no law placing a limit on the public debt until 1917, and that law has done absolutely nothing to control federal spending. The “debt limit” does nothing other than given Congressman and Senators an opportunity to grandstand, demagogue, and make long speeches about how bad it is that we’re spending too much.

At the same time, though, it creates the situation that Will notes in the clip above in which the debt ceiling vote brings the government to the very brink of default, spooks the bond markets, and brings the economy to the very edge of the cliff before pulling back. This is the height of fiscal irresponsibility, but it is also, as explained in this late season clip from The West Wing the way Washington has been operating for years:

So, instead of raising the debt ceiling this time around, Congress should eliminate it completely. After that, if Washington wants to avoid increasing the national debt they will actually have to do what the Constitution empowers them to do, take control of the purse strings, and prevent the debt from increasing. Of course, that would require our politicians to behave like adults, and to talk to us like we’re adults. Neither of which is ever going to happen.

FILED UNDER: Congress, Deficit and Debt, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Mandamus says:

    The whole idea of the debt ceiling is that it indicates some restraint. If they just chuck the whole thing, then all bets are off. The only reason that the dollar has remained as high as it has is the implied promise that someday they’ll pay back those debts. eliminate the debt ceiling and that promise loses it’s value. and the dollar soon after.

  2. Dave Schuler says:

    I agree absolutely, Doug. The debt ceiling functions solely as a vehicle for political posturing. As if an excuse is needed.

    Congress authorizes the spending; Congress enacts the taxes. The power to borrow is implicit.

  3. john personna says:

    You know it can’t happen, but I wouldn’t put it totally on the politicians. They may be cynical adults, acutely aware of how the vote to remove the limit would play.

    OMG, imagine Fox News on the vote to remove “all limit on US debt!”

  4. Jeremy says:

    But isn’t that the point of the debt limit? To force politicians to think about how much they’re spending, and have at least some sort of restraint on expanding government debt? Without that limit, what happens then? As a commentator above said, “all bets are off,” and we go down the tube.

    Keep the debt limit in place. Better yet, enact a Constitutional amendment capping federal spending growth at 2% increase per year. Debt should never exceed 50% of GDP (for then you have a situation where it becomes increasingly difficult to pay back that debt and shuts down the economy; see Greece.)

  5. John425 says:

    The “debt ceiling” at least is a benchmark alerting the ordinary citizen that spending has climbed perhaps even egregiously. Why Mataconis and his ilk would want to put blinders on the taxpayer is ridiculous. We want more transparency, not less.

  6. john personna says:

    Yes Jeremy/John425, the debt limit does provide a point of discussion.

    And yes a certain part of the frustration with the limit is really frustration with the form that discussion has taken.

    I betcha that if politicians were engaging “like adults” then Doug and Dave would have lee problems with the limit itself.

  7. Patrick T. McGuire says:

    @ Doug

    George Will said much the same thing back in January when he pointed out that the United States is the only country in the world that does this:

    This is the worst argument I have heard yet. Take a look at the financial situation of many of those countries, i.e. PIIGS, and tell me that we should be like them. And as far as I know, the US is the only country that guarantees its citizens the right to keep and bear arms. Should we also do away with that because we are the only country to do it?

    This argument reminds me of when I would scold my young son for something he did. When I asked him why he did it, his reply was always “But Dad, the other kids do it!”.

    Aren’t you the one who wants adults handling this matter?

  8. Brendan Loy says:

    In fact, there was no law placing a limit on the public debt until 1917, and that law has done absolutely nothing to control federal spending.

    This is somewhat misleading. Until 1917, Congress had to authorize each individual issuance of debt. The creation of the “debt ceiling” gave more discretion to Treasury, not less.

    Obviously, I agree with you on the topic (and thanks for the link), but I just wanted to point out that specific issue.

  9. mantis says:

    Take a look at the financial situation of many of those countries, i.e. PIIGS, and tell me that we should be like them

    No country but the US has a debt ceiling, so you’re going to claim that the ones in financial trouble are so as a result of their lack of debt ceiling? What about those whose finances are sound? Oops, logic FAIL.

    And as far as I know, the US is the only country that guarantees its citizens the right to keep and bear arms.

    You’re wrong. So it seems you don’t know very far. Mexico has a right to bear arms, as does Switzerland. North Korea’s constitution has a mandate to “arm the entire people.”

    Aren’t you the one who wants adults handling this matter?

    You’re excluded, thankfully.

  10. Wayne says:

    Maybe we should do away with the debt ceiling and go back to Congress having to authorize each individual issuance of debt.

    To Doug, Steven and those like them, anything they don’t like is fundamentally absurd. If you disagree with them then obviously you have no idea what you are talking about and you are stupid.

    The idea that the debt ceiling is supposed to be a control measure is beyond them. Granted a controlled measure that has been pretty much ignored but so has the budget at times.

  11. Wayne says:

    How many times has Congress spent money not originally budget for? Also it is not like they keep spending within the limits of revenue.

    I suppose the federal budget process is utterly redundant, since Congress already has the sole constitutional power to authorize any federal spending. So let’s do away with the budget process right? Congress can vote on each individual spending measure on its own. Congress can look at how it fits in as a whole without any formal process right? They could but unlikely would.

    Of course that would be ridiculous since individual spending should be look at as how it affects total spending. When total spending gets too large Congress should look at what individual spending items can be cut. Granted they haven’t but they should. Just because they have abused the budget process and not use it the way it was design for doesn’t mean it should be done away with. Same goes for the Debt ceiling.

  12. Phony, contrived, and needs to be eliminated can apply to so much more in Washington, DC, than just the debt ceiling.

  13. @Doug:

    When I saw the headline I was going to warn you that you are going to be told that, au contraire, the debt ceiling is central to the fiscal health of the nation.

    But I am clearly too late.

  14. So we’ve moved from it must be raised immediately, to who needs it?

  15. So we’ve moved from it must be raised immediately, to who needs it?

    It is a linked position.

  16. ken says:

    By having Congress authorize borrowing we are saying that the ‘full faith and credit’ of the USA stands behind each dollar borrowed.

    Instead of eliminating the Congressional responsibility to authorize borrowing why not just eliminate the conservative clowns who want to wreck our ability to borrow?

    I do not understand how anyone can vote for a Republican. Ever since Reagan’s first budget it was clear that they stood for nothing but fiscal irresponsibility. Cut taxes, increase spending, and borrow money is the standard the GOP has followed as a party for the last 40 years.

  17. NeightDod says:

    This article is terrible. No facts whatsoever, and full of misinformation. How about telling people that we’re 14.3 trillion dollars in debt.

    What is absurd is the idea that the Fed can just print money whenever we needs it! Ever more absurd is the idea that this is some kind of broken Republican policy. People forget so quickly how Obama and other Democrats raised hell when the Republicans and Bush raised the debt ceiling during those 8 years, and you know what? They were right then and they’re right now, except the sides are switched now. It’s a shell game designed to devalue YOUR money while they print more money and distribute it to who they see fit to better secure their own wealth and power. If you’re in favor of a fiscally responsible government then you have to understand that what this is about is holding the government accountable, rather than letting them continue to put us further into debt and destroy the dollar. I encourage everyone to be better informed on this issue.