For all of the country’s problems – the resurgence of COVID-19, the extreme weather conditions and the economic consequences of both – one would think that political leaders would not drag us into an easily preventable crisis either. Yet here we are faced with the catastrophic threat of a federal debt default.
It is a recurring political game, favorite of the Republicans. Treasury Secretary Janet Yellen said Congress needed to increase the country’s statutory borrowing limit by mid-October to the end of October to meet the country’s obligations. But with the Democrats nominally in power in Washington, Republicans are refusing to vote for a raise, risking default on the IOUs they helped rack up.
As the right wing blames red ink on President Biden’s spending plans, more than a quarter of the $ 28.5 trillion federal debt is attributable to tax cuts and spending during Donald Trump’s presidency , including the first rounds of pandemic relief. Republicans controlled the Senate for those four years and the House for two. Billions more date back to the administration of George W. Bush, when Republicans also ruled Congress for most of its two terms, and reflect the costs of deep tax cuts, two wars and a new one. right to medicines for Medicare.
Given the bipartisan responsibility for debt, here’s a bipartisan solution to avoiding this debt limit fights: Get rid of it.
That won’t happen, at least not anytime soon. Republicans, led by two of the least constructive and cynical politicians I have covered in many years, Senate Minority Leader Mitch McConnell of Kentucky and Parliamentary Minority Leader Kevin McCarthy of Bakersfield, are taking too much advantage of the disappointment of the Democrats because they plan to take control of Congress in the midterm elections of 2022.
But think about why the debt limit needs to go.
It is anachronistic. It is ineffective as an incentive for fiscal correctness. And it is divisive, sparking so-called debates that mislead Americans about what is at stake and further undermine their fragile faith in government. Instead, the nation’s commitment to cover its debts should be clear, if not explicit, in its annual spending laws, without a separate statute.
Few nations have debt ceiling laws; Denmark, the only other democracy to do so, sets its limit so high that it doesn’t matter. International investors watch in awe as the United States, the financial might of the planet, for which the dollar is the world’s reserve currency, repeatedly undermine this status – and the global economy – by wondering if the government will repay its debts. . The heartbreaking crisis of 2011, sparked by Tea Party Republicans in Congress, prompted rating firm Standard & Poor’s to downgrade the country’s AAA + rating.
The debt ceiling, as we know it, dates back to 1917. Until then, Congress had authorized the Treasury Department to borrow for specific purposes. Beginning in World War I, as the United States became a world power, Congress set broader borrowing limits so the Treasury could better manage federal finances. As US bonds rose, so did the frequency of votes to lift the debt limit.
Since 1960, according to the Treasury, Congress has acted 78 times to adjust the cap – 49 times under Republican presidents and 29 times under Democrats. But beginning in the Reagan era, as the polarization of debt and politics increased, lawmakers often militarized debt limit votes to make the ruling party appear lavish and they – even fiscally fair. Five times in the past decade, Congress has flirted with overbudget default. Yet the three times Congress raised the cap under the Trump administration, Democrats have lent their support to making actions bipartisan.
Lifting debt limit not a green light for further spending, despite McConnell’s move repeated complaints that Republicans oppose a raise because of “Democrats'” tax frenzy and reckless spending. ” It simply allows the government to pay off debt it has already incurred through spending laws and tax cuts, including social security and health insurance benefit obligations, contracts defense, veterans health care and more.
The headline of an analysis Tuesday from Moody’s Analytics read it all: “Playing a Dangerous Game with the Debt Limit.”
Voting against a higher debt ceiling is like voting for a balanced budget constitutional amendment, another Republican workhorse: neither is doing anything to resolve the imbalance between revenue and income. federal spending. Such ploys are like political stickers, easier and more popular than proposing spending cuts and tax increases to actually reduce debt.
In the decades that I reported on fiscal policy, starting with Ronald Reagan’s second term, annual federal spending was largely equivalent to about 21% of the country’s gross domestic product, while taxes covered an amount of the order of 18%. This left annual deficits of around 3% of GDP (more in years of economic crisis, less in good times, and with the exception of a few years of surpluses at the end of Bill Clinton’s presidency).
Given this experience from Reagan to Trump – an era of four Republican presidents and two Democrats, when control of Congress shifted from party to party or was split between them – it’s high time to recognize that there is a rough consensus in this country. to accept certain deficit expenses. This simple fact should regulate the way of managing the debt ceiling: either unite to raise it whenever necessary, or abolish it.
The House took the first step on Tuesday by voting to raise the limit enough to fund projected debt until December 2022 – right after the midterm elections. Democrats provided the 220 votes for this act of fiscal responsibility. McConnell irresponsibly reiterated his self-fulfilling vow that Republicans will block action in the Senate.
In these scam crises, Democrats are inevitably at a disadvantage. They believe in making government work. The Republicans, formerly the Small Government Party, have recklessly become the anti-government party. When McConnell and McCarthy signal that they are ready to lead the country to a fiscal cliff, Thelma and Louise style, believe them.
Take the wheel. Avoid the crash. End the debt limit.