With August 2 looming, the debate over raising the debt ceiling has become almost passé. Economists of all political stripes have issued their dire warnings, with few dissents from any legitimate experts. Political commentators have provided blow-by-blow descriptions of the behind-the-scenes drama, such as it is. Pundits have offered their explanations of why the impasse between the two political parties cannot be bridged, despite the concerted efforts of many, starting with the President, to find a workable compromise.
But few have called this one for what it is. And what it is can be summed up in one word: unwarranted. The debate, and, more particularly, the crisis that now exists over whether the United States will default on its financial obligations, is completely unwarranted. Moreover, making an issue over raising the debt ceiling is the height of irresponsibility. No elected member of Congress, let alone the president of the nation, would ever have considered it a matter to be debated until this year.
The reasons we have gotten to this point, with the threat of default and all the horrors it portends looming, need to be understood. In the process, the real villains in the story can be revealed. So, hang on to your hats, my friends, because I am going to say here and now what no one in the administration and few in the media apparently have had the courage to say.
First of all, let’s understand what the debt ceiling actually is. It is the amount of indebtedness the United States government allows itself to incur to meet its financial obligations. And, since the government can legally authorize any amount of indebtedness it wants (it is its own judge of how much it wants and needs to borrow), it has only one responsible option when the amount it owes cannot be met by current revenues. And that option is to authorize itself to borrow more funds to meet those obligations.
Think of it this way: Imagine that you are capable of borrowing as much as you need to meet your debt and other financial obligations. You have no restrictions in that respect. Would you willingly refuse to borrow more when you needed more funds to meet those obligations? Certainly not. To do so would be to tell those dependent on your payments that you were an irresponsible deadbeat, a deliberate bankrupt, an unethical reprobate of the worst order.
Of course, individuals do not have that ability. We are limited by our creditworthiness, which is largely determined by our income and our history of paying past and current debts. But the United States government does have that ability. And it only needs to authorize itself to do that additional borrowing to maintain its obligations and its maximum creditworthiness, so that lenders will willingly lend to it the funding it needs to meet those obligations.
This authorization is accomplished by an Act of Congress, i.e., by the passing of a bill which is then signed into law by the President. It is really as simple as that, and so has been for as long as the country has maintained a standing debt.
Normally that bill is one sentence long, saying, in effect, the United States Treasury shall be authorized to assume indebtedness to the level of X number of dollars. And the debt ceiling has been raised in just such a simple manner, normally by unanimous vote of both houses of Congress, repeatedly in our history (five times alone during the administration of President George W. Bush).
But this year, the matter has become a matter of debate in Congress. Why? The answer reveals much more about one of the country’s two major political parties than it does about the nation’s economic health.
Whether to raise the debt ceiling has become an issue because the Republican Party in Congress has decided to make it an issue. And that party has decided to make it an issue solely because it is ideologically opposed to the size of the federal government.
But we need to be more specific. The battle being waged by the Republicans in Congress isn’t over the overall size of the federal government. Many Republicans, for example, want an even larger defense budget and increased border security funding, along with any number of “perks” (earmarks) for their constituents.
What the Republicans really want to do is roll back the social programs they have long opposed, to wit: Medicare, Medicaid, Social Security, Aid to Families with Dependent Children, Unemployment Insurance, veterans’ benefits, federally funded student loans and anything else that, to them, smacks of welfare or federal involvement (all of which constitutes inappropriate government involvement in the lives of private individuals).
Of course, this perspective is nothing new. It first surfaced during the Great Depression in opposition to the New Deal legislation of the 1930s, gained steam in opposition to the Great Society legislation of the 1960s, and was a major rallying cry during the Reagan administration in the 1980s.
But it is never even mentioned in the current debate over the debt ceiling. The rhetoric, instead, presses the wholly fallacious claims that high unemployment is due to excess spending (the exact opposite is true) and that under no circumstances should any tax increase of any kind be considered (another argument that is specious at best).
The Republican rhetoric is a scoundrel’s mask. The real reason the country is facing a major economic calamity (which is what surely would occur if the debt ceiling is not raised) is an ideological battle plan that is willing to sacrifice the country’s economic viability to roll back the New Deal/Great Society programs that most Americans support and rely on.
In short, Republican intransigence on the debt ceiling is nothing more than a new tactic designed to “kill the beast.” That battle can be fought in many legitimate ways (e.g., legislation, political campaigns, ballot initiatives). Holding the country’s economy hostage is not one of them.
And so, when the scoundrel’s mask is removed, the real villains in the current debate are fully exposed. They are the elected Republicans in Congress.