In years past, the vote to increase the U.S. government's “debt ceiling” has been considered a “must pass” piece of legislation. Without it, borrowing stops, which—in a situation as dependent on borrowed money as the one the federal government is currently in—is the functional equivalent of economic Armageddon.
It is the case no longer. There are a number of newly-elected Republicans on Capitol Hill who believe the only way to demonstrate the nation is serious about ending its addiction to borrowed money and to living within its means is to block the upcoming effort to raise it.
The facts are persuasive. The federal government has borrowed more under President Barack Obama than it has under all the previous presidents combined. Indeed, Obama himself called the need to raise the debt ceiling “a sign of a leadership failure” when he voted against such a measure back in 2006.
The current debt limit is almost $14.5 trillion dollars, which, any way you slice it, is a lot of money. It's so much money, in fact, that it is about equal to one year's U.S. Gross Domestic Product. The reason it has to be so large, and may even get larger, is that while the U.S. economy is not growing, the government continues to do so. [See editorial cartoons about the economy.]
Failing to raise the debt ceiling would send shock waves through the bond market and would not be a good thing. On the other hand, raising it won't do much to restore confidence in the nation's economic future either. It places Congress and the president squarely in between the proverbial rock and a hard place. There really is no good option.
There are some steps that Congress could take and President Obama could approve that may ameliorate such a crisis in the future. One is to attach to the debt ceiling a measure that would end the process of continuing resolutions to fund the government forever. Rather than give Congress the option or even the ability to fund the government through such measures should the various authorization and appropriations bills not be in place by the October 1 beginning of the fiscal year, the funding mechanisms should be placed on autopilot, but at a rate slightly reduced from the previous year.
Painful? Perhaps. But such draconian measures are really the only way to hold Congress accountable for failing to get its work done on time. After all, there are few things many members of Congress like to do more than spend other people's money. Adopting a measure that would fund the both discretionary and mandatory spending at, say, 2 percent less than what it was the previous year would provide every congressman and senator with ample incentive to get the job they were elected to do done right and on time. The political consequences of failure would just be too high.
Another idea would be to impose Gramm-Rudman-Hollings-like automatic cuts on federal spending across the executive and legislative branches by some amount—say 5 percent—any time the debt ceiling was reached. Again, this would be a politically painful temporary fix but it would help put things in their proper place, with government and the political class bearing the pain of too much borrowing rather than making the taxpayers deal with it.
It is clear that spending under the current administration is out-of-control. The problem is not that revenues are too low but that spending is too high. There is no plainer way to say it than that. The tax hike lobby wants to take more money out of the private economy and redirect it into the so-called public coffers. That, as history teaches us, is no way to generate economic growth. If you have a weight problem, the last thing you want to do is up your food intake. Washington has a spending problem—and it's time it was addressed for real.