Official portrait of Federal Reserve Chairman Ben Bernanke. (Photo credit: Wikipedia)
“Raising the debt ceiling gives the government the ability to pay its existing bills. It doesn’t create new deficits. It doesn’t create new spending.” ~ Ben Bernanke, Federal Reserve Chairman
Once again, the full faith and credit of the United States was brought to the brink of default by political posturing. This most recent debacle has Americans assigning the majority of the blame to the GOP, and most especially to Senator Ted Cruz (R-TX), who is more concerned with self-promotion than doing what is in the country’s best interest. He is now one of the most unpopular men in the Congress, not to mention in the country, except for a small contingent of right-wing zealots bent on destroying American government. These folks think Cruz is just dandy. He is their hero.
This month’s showdown is guaranteed a replay after the holidays. The political theatre we witnessed over the past month will no doubt take center stage again. The same battles will be fought and the country’s financial stability will be further jeopardized. In addition to the debt ceiling circus, the 16-day government shutdown left 800,000 federal workers furloughed, resulting in lost wages and decreased purchasing power, further hindering already tepid economic growth. The cost of the shutdown by some estimates is as high as $24 billion.
Conservatives, especially Tea Party Republicans in the House of Representatives, were adamant about using the debt ceiling issue to defund or delay the Affordable Care Act. Neither the President nor the Democrats were going to allow that to happen, nor should they. When this attempt failed, conservatives tried other bargaining chips. Congressmen Marlin Stutzman (R-IN) even said, “We’re not going to be disrespected. We have to get something out of this. And I don’t know what that even is.” Seriously? How old is he? That statement alone reveals how uninformed and incompetent some are in the House.
The long-term debt is a concern. It has risen significantly over the years, but paying our debts should never be used as a bargaining tool. Congress should instead work during their legislative sessions to determine the country’s budget priorities—how we raise revenue and cut spending. And yes, we must do both. We cannot only raise taxes nor can we only cut spending. Congress holds the power of the purse. It is their job to set the budget. It is irresponsible to repeatedly push America toward default just so a minority party can get its way. Moody’s put the US on credit ratings watch in 2011 because of such a stunt, while S&P actually did downgrade the rating from AAA to AA+. One would think that these supposed “free marketers” would understand that uncertainty is no friend to the economy, domestic or global.
Most Americans, even some legislators, do not understand the difference between the national debt and the budget deficit. Here is a good resource if interested. Raising the debt ceiling does not open the floodgates to new spending, it merely allows the U.S. government to pay the bills Congress has already approved. This is why the rating agencies have threatened, and a couple have, to downgrade the U.S. credit rating, which would have dire consequences for our country’s borrowing capability. China has even suggested replacing the dollar as the world’s reserve currency, and who can blame them when they witness our governmental dysfunction?
Furthermore, the 14th Amendment to the Constitution states: “The validity of the public debt of the United States shall not be questioned.” Do Ted Cruz and his Tea Party buddies not realize this? They prefer to ignore it while wrapping themselves in the flag and the Constitution, claiming they are the only “real” Americans. As Norm Ornstein writes of this situation: “To begin, this is entirely an engineered crisis perpetrated by House Republicans with Senate allies, hatched, as we now know, by outside individuals and groups including Ed Meese, Heritage Action, and the Koch brothers. We know that John Boehner really did not want a shutdown, and that he had agreed to a clean continuing resolution after Senate Democrats capitulated in entirety to his party’s demands on appropriations—meaning a continuation of the sequester and the much lower overall spending numbers of the Ryan budget (including higher spending for defense.)”
In light of all this, some have suggested eliminating the debt ceiling. The United States government’s ability to pay its bills should never be held hostage by self-serving politicians bent on manufacturing a debt crisis in order to achieve their ideological goals. And yes, Democrats have voted against raising the debt ceiling too—even President Obama when he was a senator. However, in the past, whether from Democrats or Republicans, these votes were mostly taken by a few to show opposition without an actual threat of government default.
Below are several articles advocating for debt ceiling elimination. The PDF of Congressional Research Service’s report on The Debt Limit: History and Recent Increases can be downloaded here. It’s not the most riveting material, but it does provide important information about the federal debt.